Credit Score And History 3 29 11 B Wills


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Credit Score And History 3 29 11 B Wills

  1. 1. Revised 2.21.11C
  2. 2. How does my credit report and credit score affect me? } What is the cost of “Poor” credit score? Revised 2.21.11C
  3. 3. How much does it cost me? } Monthly Payments For the Average Family. Revised 3.28.11C
  4. 4. Credit Report } Information communicated by a credit reporting agency that bears on a consumer’s credit standing. Name Address Credit history Credit inquiries Collection records Public records (e.g. tax liens, judgments, bankruptcies)
  5. 5. Credit Score } “Refers to a number generated by a statistical model which objectively evaluates information that pertains to making a credit decision.” Revised 2.21.11C
  6. 6. What is a Credit Score? } A numerical score indicating a consumer’s likelihood to repay a loan. Revised 2.21.11C
  7. 7. Credit Report & Credit Score } What’s not included in a credit report or credit score? Race, color, religion, national origin, sex and marital status Salary, occupation, job title, employer, date employed or employment history Interest rates on any accounts Rental agreements (monthly rent may be reported if the major, rental company reports to Experian-only.) Any information reported as child/family support obligations (lates may be reported) Revised 3.28.11C
  8. 8. Credit Agencies } EquiFax: Beacon Score TransUnion: FICO Score Experian: Fair Issac Score Not all companies report to all three credit agencies. Revised 2.21.11C
  9. 9. Credit Report Information } Heading information Scores Trade-lines Inquiries Collection and Public Record Revised 2.21.11C
  10. 10. Resource dated 2.21.11: Revised 2.21.11C
  11. 11. Average } Credit Statistics Past Payment Performance Credit Utilization Credit Statistics: 9 credit cards 4 installment loans Past Payment Performance: <50% have ever had 30 day late reported <30% have ever had a 60 day late reported <27% have ever had a 90 day late reported <20% have ever had a loan or account closed due to default Credit Utilization: 48% owe less than $5,000 on credit cards 15% owe more than $10,000 on credit cards Revised 2.31.11C
  12. 12. How are my credit score calculated? } A snap shot in time. Components: INQUIRES ON CREDIT TYPES OF CREDIT IN USE Payment History PAYMENT HISTORY Credit Utilization CREDIT HISTORY Credit History Types of Credit in Use CREDIT Inquires on your Credit UTILIZATION Revised 2.21.11C
  13. 13. Payment History Revised 2.21.11C
  14. 14. Payment History (35%) } What is considered…. Number of accounts paid as agreed Presence of collections and public records (bankruptcy, judgments, tax liens) Payment information on all accounts Number of past dues Severity of Past Dues (30, 60, 90, 120, 150 & foreclosure) Time since past dues Revised 2.21.11C
  15. 15. Payment History } What you need to know… The fewer late payments, collections, judgments, liens the better. RECENT late payments and collections DECREASE YOUR SCORE MORE than events older than 24-months. For example: A 30-day payment today will drop your credit score more than a bankruptcy three-years ago: with clean credit since the bankruptcy. Revised 2.21.11C
  16. 16. Payment History } Tips to improve my scores Pay all bills on time If you are past due on an account, get current and stay current. Pay off judgments and liens Pay off collections (if needed*) Contact creditors to ask for extensions, or as a last resort, negotiate lower payments. Revised 2.21.11C
  17. 17. Credit Utilization Revised 2.21.11C
  18. 18. Credit Utilization (30%) } What is considered: Amounts owed on specific type of accounts (i.e.: mortgage, installment, revolving etc.) Number of accounts with balances Installment loan – proportion of balance to original loan amount. Revolving Accounts – Proportion of balance to credit limit. Revised 2.21.11C
  19. 19. Credit Utilization } What you need to know. Proportion of balance to credit limit is key! Max score for a credit card is when you owe between $1 to 30% of the credit limit. Owing zero and never using a credit card doesn’t increase your scores. Not having credit cards does not increase your scores. Revised 2.21.11C
  20. 20. Credit Utilization } Tips to improve my scores. Keep credit card balances between $1 and 50% of credit limit. It’s better to have a couple cards with small balances than one maxed out. Pay down debt: don’t move it around. Don’t close open, unused credit cards, use them. Don’t open new credit cards unnecessarily. Pay credit cards bills before the due date (credit bureaus are updated on due dates). Revised 2.21.11C
  21. 21. Credit History Revised 2.21.11C
  22. 22. Credit History (15%) } What is considered… Length of time accounts have been open. Revised 2.21.11C
  23. 23. Credit History } What types of credit are considered The longer you have an account open, the better. Don’t closed seasoned accounts!! Avoid “Credit Surfing” (the continuous process of jumping from one low-rate credit card to another) Keep balances low. Don’t open too many new accounts at once. Revised 2.31.11C
  24. 24. Types of Credit in Use (10%) } What types of credit are considered? Mortgage Installment Loans Revolving Accounts Revised 2.31.11C
  25. 25. Credit History in Use } Tips to improve my scores: Finance company accounts - score lower than accounts you receive through banks or stores. REMEMBER: Most “90-day same as cash” deals are from finance companies. You should have at least three open and active accounts in addition to any mortgage(s) you may have. Revised 2.21.11C
  26. 26. Inquiries on your Credit Report (10%) } What is considered… Only inquiries authorized by you. Pre-approved offers don’t count. Revised 2.21.11C
  27. 27. Inquiries Revised 2.21.11C
  28. 28. Inquiries on myCredit Report } Tips to improve my credit score: Auto and mortgage shopping should be done in a short- period. Multiple auto or mortgage inquiries within 45-days count as one inquiry*. Inquiries made by YOU are not counted Research the credit card you want to apply for and apply direct with the company. Don’t apply to numerous companies. *If the inquiring lender uses a general lending code, rather than an auto or mortgage specific code, the inquiries must be within 15-days to count as a single inquiry. Revised 3.28.11C ASunderland
  29. 29. Collections Revised 2.21.11C
  30. 30. Collections } Know what’s on your credit report! Improving your credit score – paying off collections in a short-time to improve your credit score is not always a good idea. Negotiate pay-off amounts, ask if they will remove the entry from your credit report. Get settlement offer in writing. Pay by check. Keep settlement offer and cancelled check for record: this is the proof you will need to reflect the said collection account has been paid. Revised 2.21.11C
  31. 31. Public Record Revised 2.21.11C
  32. 32. Public Record } Judgments Tax Liens Other Liens Bankruptcies Revised 2.21.11C
  33. 33. Your Credit Report Revised 2.21.11C
  34. 34. How to get your credit report } Federal law states you can get one-free credit report from each of the bureaus once a year. Annual Credit Report: 1-877-322-8228 EquiFax Bureau: 1-800-685-1111 TransUnion Bureau: 1-866-726-7388 Experian Bureau: 1-888-322-5583 Credit scores are not included in the annual free-credit report. You must purchase your credit scores from each bureau. To better monitor your credit, space out your requests to the 3-credit bureaus one at-a-time throughout the year, rather than all 3 bureaus at one- time annually. Revised 3.28.11C
  35. 35. Errors on your credit report } How do I dispute errors on my credit report? Changes must be made at with the credit bureau in order for the changes to affect your scores. The best way to dispute your credit report errors is online. EquiFax Bureau: 1-800-685-1111 TransUnion Bureau: 1-866-726-7388 Experian Bureau: 1-888-322-5583 Revised 2.21.11C
  36. 36. Bad Credit } How do I repair bad credit? Pay all bills on-time Pay collections Don’t call a creditor UNLESS you | Check your credit report, dispute any can pay the collection in-full factual errors yourself Try to negotiate a lower payment My opinion, avoid “credit repair agencies” Bankruptcy (seek legal advice) Chapter 7 Pay judgments and liens Chapter 13 Establish new credit: three-new cards Credit cards, charge cards Secured credit cards Revised 2.21.11C
  37. 37. Pre-Approved } How to stop pre-approved credit card and other offers. Stops companies from sending you “pre-approval” offers. Good for five-years. Noticeable drop in junk mail within 30-days. Theoretically doesn’t improve your credit score. Revised 2.21.11C