Understanding Your Credit Report and Score

UNDERSTANDING Your CREDIT REPORT & SCORE www.credit.org Promoting Financial Literacy Presented by: Lori Lamb - Credit Education Supervisor

About Springboard
Springboard is a non-profit organization founded in 1974.
We offer personal financial education and assistance with money, credit, and debt management through educational programs and confidential counseling.

About Springboard
Accredited by the Council on Accreditation (COA)
Member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA)
Member of the National Foundation for Credit Counseling (NFCC)
Certified by the Department of Housing and Urban Development (HUD)
Member of the Better Business Bureau (BBB)

Our Services Include
Credit and Debt Counseling
Financial Education Programs – Seminars and Materials
Debt Management Plans
Homeowner Assistance (Foreclosure Prevention)
1-888-995-HOPE or 1-888-995-4673
First Time Home Buyer Education Seminars
Reverse Mortgage Counseling
Pre-Bankruptcy Budget and Credit Counseling
Pre-Discharge Financial Management Instructional Course

Introduction
It is well established that credit scores are now a cornerstone of the U.S. credit system.
Credit scores determine access to housing, unsecured credit lines, insurance, cable, utility and cell phone services, and employment.
It is imperative that the underlying data be correct for the score to have any meaning and consumers to accept the validity of credit scoring .

Credit History is Your Financial DNA
According to study conducted by the Public
Interest Research Group PIRG “Mistakes Do
Happen:
A Look at Errors in Consumer Credit
Reports” www.pirg.org , in which it was found
that one in four credit reports contains error
serious enough to cause consumers to be
denied credit, a loan, an apartment or home
loan or even a job.

Credit History is Your Financial DNA
The importance of good credit
More employers are reviewing credit reports of prospective employees
Insurance companies review your credit report when you apply to insure you home and/or car.
Without good credit, it is very difficult to obtain a credit card, which is helpful if an emergency arises.
Many businesses prefer the use of credit cards.
Many employment fields, such as financial services, gaming, military and law enforcement, continually monitor their employees’ credit reports.

Make sure you get credit when credit is due
An estimated 50 million Americans have little or no credit history
and therefore can’t access mainstream credit. There are many
businesses such as child care, private mortgages, payday lenders,
gas, electric, water, telephone, utilities and cable TV that create
regular monthly payment flows that are not aggregated to a credit
history.
Fair Isaac “Expansion Score” - Fair Isaac's FICO® Expansion® Score predicts credit risk for consumers without FICO® scores by bringing together data in real time from alternative credit data sources - www.myfico.com
Payment Reporting Builds Credit (PRBC) - http://prbc.com/
Rent Reporters - RentReporters is a service that verifies your monthly rent payments with your landlord and provides that data to the credit bureaus to be added to your credit report. www.rentreporters.com
First American CREDCO's Anthem Score represents a comprehensive and reliable underwriting score for consumers. who have little or no credit history. Anthem Report and Anthem Score http://www.credco.com

Credit Reports
What information is contained in my credit report?
Identifying Information
Public Record
Credit Information
Inquiries

Identifying Information
Identifying Information:
Your name and AKA’s
Current and previous addresses
Telephone number
Social Security Number
Date of birth
as well as current and previous employers.
This information is not used in the scoring, but to verify your information with the information on an application.
Also the first place you may spot identity theft!

Public Records
Public Record Information:
Bankruptcy records, tax liens, monetary judgments, debts referred to collection agencies and, in some states, overdue child support is noted on the credit report.
Chapter 7 Bankruptcy Information can remain on a consumer’s credit report for up to 10 years from date filed.
Unpaid tax liens can be reported indefinitely , and paid tax liens remain for 7 years from the date paid .
Unpaid judgments report for 7 years from date filed , once paid 7 years from date paid .
Other public record information (late payments, collections) can remain for up 7 years.

Credit Information or Trades
Credit Information:
Specific information about each account, such as:
The date the account was opened
The credit limit or loan amount
The balance due
Monthly payment
Payment history during the past several years (FICO focuses primarily on the most recent 12-24 months).
Status of the account (open, closed, past due, charged off, included in BK etc…)
For open accounts, positive credit information remains on the report indefinitely.
Information on closed accounts with negative payment notations remain up to seven years from the last 30 day late.
Information on closed accounts with no late payment history remain for 10 years.
The report also states whether a spouse or co-signer is responsible for paying the account.

Inquiries
Inquiries: The credit report also lists the names of those who obtained information from the credit report for the past two years.
“ Hard” inquiries are those that result from an attempt to solicit credit or a loan.
Other types of inquiries, such as those that result when a consumer requests a copy of his or her own report directly from the credit reporting agencies, are “Soft” inquiries that are not viewed by prospective creditors but are recorded and remain on the report from one to two years.
Employers, landlords, pre-approved not responded to are all soft inquires.
Consumers should be aware that when they request copies of their credit reports from third party vendors, rather than directly from the credit reporting agency, the inquiry often looks like a request for credit.

Inquiries for Rate Shopping
The score allows for “rate shopping.”
Looking for a mortgage, auto, or education loan may cause multiple lenders to request your
credit report, even though you're only looking for one loan.
To compensate for this, the score ignores all mortgage, auto, and education inquiries made in
the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect
your score while you're rate shopping!
In addition, the score looks on your credit report for auto, mortgage, education inquiries older
than 30 days . If it finds some, it counts all those inquiries that fall in a typical shopping
period as just one inquiry when determining your score.
For FICO scores calculated from older versions of the scoring formula, this shopping
period is any 14 day span.
For FICO scores calculated from the newest versions of the scoring formula , this
shopping period is any 45 day span . Each lender chooses which version of the FICO
scoring formula it wants the credit reporting agency to use to calculate your FICO
score.

Your Free Credit Report
You should review your credit reports at least once a year.
You are entitled to one free report from each bureau every 12 months from:
www.annualcreditreport.com
877-322-8228
Scores are not free!

Experian
Unfortunately, as of early 2009 Experian has stopped allowing consumers to access their FICO score.
Only lenders may purchase a consumers Experian FICO score. This leaves consumers unable to know in advance what that score is in order to take steps to improve it before seeking credit.
Consumers may still access their TransUnion and
Equifax FICO scores directly by visiting www.myfico.com.
Or you may go to www.experian to purchase their Vantage Score. (This is Not a FICO score).
Once your lender has obtained your FICO scores from the credit bureaus, you are entitled to request a copy from your lender, including your Experian score and the factors that are influencing the score.

Additional Free Credit Reports
Anyone can request an additional free credit report for the following reasons:
You have been denied credit, insurance, housing, or employment within the previous 60 days.
You have been a victim of identity theft and have reason to believe that information is incorrect due to fraud.
You are without employment and plan to apply for employment within the next 60 days.
You are receiving public assistance.
If a negative decision, in whole or in part, has been made in relation to the information that is in your credit report.
If your credit report has been modified due to an investigation that you requested.

Free Specialty Consumer Reports
ChexSystems is a nationwide specialty consumer reporting agency that collects and maintains
information from member financial institutions such as banks and credit unions. If a bank closes
Your checking account because of insufficient funds, for example, it will make a report to
ChexSystems that other banks will check when you apply for new accounts.
Toll-free number : (800) 428-9623.
Web : www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm
Shared Check Authorization Network (SCAN) is owned by Deposit Payment Protection
Services (DPPS). It maintains a database of returned checks and instances of fraud. It provides
Check authorization and verification to its members, primarily retailers.
Toll-free number : (800) 262-7771 (U.S., Guam, and Puerto Rico) Fax: (800) 358-4506
Web : www.consumerdebit.com/consumerinfo/us/en/consumerreports/index.htm
To Order by Mail : Print the order form from the www.consumerdebit.com website and mail to:
Deposit Payment Protection Services, Inc.
Attn: Consumer Referral Services
7805 Hudson Road, Suite 100
Woodbury, MN 55125
To Order by FAX : Fax the order form to 800-358-4506

Free Specialty Consumer Reports
TeleCheck also maintains a database of returned checks and instances of fraud.
It provides check authorization and verification to member retailers.
Toll-free number : (800) TELECHECK (800-835-3243 not necessary to dial last 2 digits).
Web : www.telecheck.com .
TeleCheck Services, Inc.
5251 Westheimer
Houston, Texas 77056
Declined Check Information: (800) 366-2425
Some other Nationwide Specialty Consumer Reporting Companies:
Medical Insurance Bureau - Medical records or payments www.mib.com/html/request_your_record.html
Residential or tenant history - First Advantage SafeRent (Formerly known as Unlawful
Detainer Registry (UDR) • www.fadvsaferent.com
Employment history - background checks provided by Choicepoint www.choicepoint.com/
Insurance claims - CLUE • www.choicetrust.com/

Credit Score – FICO or FAKO?
What is a credit score?
Why are your three scores different?
What affects your credit score?

What Affects Your FICO Score?

Simple Ways to Improve Your Credit Score
Review credit reports regularly - Dispute any inaccuracies
Make your payments on time/pay off unpaid debts -collections
Keep balances below 50% of line of credit or less (Lenders prefer 25% or less)
Keep old credit active – use the card at least once or twice a year to keep active
Demonstrate a good mixture of credit history: Revolving, installment, mortgage
Limit inquiries

Credit Consumers Should Know Their Rights
Fair Credit Reporting Act FCRA – Purpose is to promote accuracy and fairness, and to ensure the privacy of information in your credit reports along with dispute rights.
Fair Debt Collections Practices Act FDCPA – Purpose is to prevent abusive, deceptive and unfair debt collection practices by debt collectors.
Fair and Accurate Credit Transactions Act FACTA – Amendment to the FCRA, intended to primarily help consumers fight the growing crime of identity theft, accuracy, privacy, limits on information sharing, and new consumer rights to disclosure and free credit reports.
Any violations to the above laws – file a complaint with the Federal Trade Commission at www.ftc.gov

Disputing Errors
What can you dispute?
Anything that is not yours (reported to the wrong credit report or id theft)
Anything that is reported inaccurately
Anything that is past the statute of limitations for reporting

Statute on Limitations for Reporting
Typical retention periods (may vary by state):
Chapter 7, 11 or 12 bankruptcies 10 years from the date filed
Chapter 13 bankruptcy filings 7 years from date paid
Chapter 13 bankruptcy that is not completed 10 years
Bankruptcies voluntarily dismissed 7 years
Civil judgments 7 years from the date filed
Unpaid tax liens can remain indefinitrly
Paid tax liens 7 years from date paid
Collections paid or unpaid 7 years from date of the initial missed payment
Charge off accounts 7 years from date of the initial missed payment
Credit accounts 7 years from the date of initial missed payment
Inquiries 2 years

Basics of sending dispute letters
Provide a copy of your photo id, social security card, and proof of address (such as a utility bill, pay stub or bank statement)
Provide copies of any documentation supporting your dispute
Keep originals send copies
Send all letters certified mail or return receipt
Keep a separate file for each of the credit reporting agencies
Respond quickly
Know your rights!

Opting Out
You can remove your name from any list compiled by a credit reporting agency, whether the list is for pre-approved credit offers or direct marketing.
To "opt-out," that is, to remove your name from mailing lists compiled by credit bureaus.
Call the toll-free number all credit reporting agencies are required by law to maintain for this purpose:
Opt out of pre-screened or pre-approved credit offers @ 1-888-5OPT-OUT or 1-888-567-8688 .
www.optoutprescreen.com
They can stop the selling of your personal information to creditors.

Resources
www.credit.org - Springboard’s Free educational downloads and financial tools – select Resource Center.
www.whatsmyscore.org - Visa’s educational interactive tutorial that explains credit, credit scores and how to build solid credit and free FICO Score Estimator that can help you approximate your score.
www.myfico.com - Fair Isaac’s Educational website
www.ftc.gov – Your rights, educational materials or to file a complaint

Thank You!
Springboard Nonprofit Consumer
Credit Management
800-WISE PLAN
www.credit.org
[email_address]

Understanding Your Credit Report and Score

by Springboard on Aug 11, 2010

Accessibility

Categories

Tags

Upload Details

Usage Rights

Statistics

Understanding Your Credit Report and Score — Presentation Transcript