Revised Credit

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Revised Credit

  1. 1. Unlocking Credit & Identity Theft
  2. 2. Introduction <ul><li>Jesse Ostdiek </li></ul><ul><li>Pinnacle Bank </li></ul><ul><li>Real Estate Broker </li></ul><ul><li>Vice President- </li></ul><ul><li>Mortgage Lending </li></ul><ul><li>402-960-0330 </li></ul><ul><li>[email_address] </li></ul>
  3. 3. What to learn… <ul><li>What is FICO? </li></ul><ul><ul><li>Range & Averages </li></ul></ul><ul><ul><li>How it helps you </li></ul></ul><ul><ul><li>What makes up your score </li></ul></ul><ul><ul><li>Tips to improve your score </li></ul></ul><ul><ul><li>Credit Statistics </li></ul></ul><ul><li>Your Credit Report </li></ul><ul><ul><li>What’s inside </li></ul></ul><ul><ul><li>Myths and Truths </li></ul></ul><ul><ul><li>Errors & How to Correct them </li></ul></ul><ul><ul><li>Your Rights </li></ul></ul><ul><ul><li>How to monitor & freeze your credit </li></ul></ul><ul><li>Identity Theft </li></ul><ul><ul><li>Statistics </li></ul></ul><ul><ul><li>How they get your info </li></ul></ul><ul><ul><li>6 Warning Signs </li></ul></ul><ul><ul><li>How to Protect Yourself </li></ul></ul><ul><ul><li>What to do if it happens </li></ul></ul>
  4. 4. Your Fico Score <ul><li>FICO - Fair Issac Corporation (credit scoring model) </li></ul><ul><li>Important measurement that affects your ability to get credit, the terms & payment </li></ul><ul><li>Most trusted and widely used score </li></ul>720 785 684 585
  5. 5. What is a FICO Credit Score <ul><li>3 Digit Score: Estimates a consumer’s willingness & ability to repay a debt based on previous behaviors </li></ul><ul><li>Statistical analysis that removes the judgmental & subjective aspects of determining whether credit should be granted </li></ul><ul><li>Over 75% of mortgage lenders & 90% of the top 100 lenders use it to determine credit worthiness </li></ul>
  6. 6. Range & Averages <ul><li>Ranges between 350 to 850 </li></ul><ul><li>Most fall between 600–800 </li></ul><ul><li>> 740 equals the Best Rates & Terms </li></ul><ul><li>Nebraska average: 695 </li></ul>
  7. 7. Does it Really Matter? <ul><li>Borrower 1 $240,000 30 Yr Mortgage Loan </li></ul><ul><ul><li>Score: 741 </li></ul></ul><ul><ul><ul><li>4.75% with Monthly P&I : $965 </li></ul></ul></ul><ul><ul><ul><li>Total Interest: $162,400 </li></ul></ul></ul><ul><li>Borrower 2 </li></ul><ul><ul><li>Score: 739 </li></ul></ul><ul><ul><ul><li>4.875% with Monthly P&I : $979 </li></ul></ul></ul><ul><ul><ul><li>Total Interest: $167,450 </li></ul></ul></ul><ul><ul><ul><li>Costs $14 more monthly, $168 annually or $5000 more over 30 yrs </li></ul></ul></ul><ul><li>Borrower 3 </li></ul><ul><ul><li>Score: 640 </li></ul></ul><ul><ul><ul><li>5.5% with Monthly P&I : $1050 </li></ul></ul></ul><ul><ul><ul><li>Total Interest: $193,000 </li></ul></ul></ul><ul><ul><ul><li>Costs $95 more monthly, $1,140 annually or $30,600 more over 30 yrs </li></ul></ul></ul>
  8. 8. How Credit Scoring Helps You <ul><li>People Get Loans Faster </li></ul><ul><li>Credit Decisions are Fairer </li></ul><ul><li>Credit Mistakes Count for Less </li></ul><ul><li>More Credit is Available </li></ul><ul><li>Credit Rates are Lower Overall </li></ul>
  9. 9. What Makes Up Your Fico Score <ul><li>35% - Payment History </li></ul><ul><li>30% - Amounts Owed & Type </li></ul><ul><li>15% - Length of Credit History </li></ul><ul><li>10% - New Credit </li></ul><ul><li>10% - Types of Credit Used </li></ul>
  10. 10. Tips on Improving Your Credit Score <ul><li>Payment History </li></ul><ul><ul><li>Get Current & be on time </li></ul></ul><ul><ul><li>Avoid collections, they stay for 7yrs </li></ul></ul><ul><li>Amounts Owed </li></ul><ul><ul><li>Amounts Owed vs. Available Credit </li></ul></ul><ul><ul><li>Keep low balances , increase credit limits </li></ul></ul><ul><li>Length of Credit History </li></ul><ul><ul><li>New accts lower your overall avg acct age </li></ul></ul><ul><ul><li>Longer history with creditor is better </li></ul></ul><ul><li>New Credit </li></ul><ul><ul><li>Rate shop within 30 days </li></ul></ul><ul><ul><li>Limit requests for new credit </li></ul></ul><ul><li>Types of Credit Use </li></ul><ul><ul><li>Use all types of credit including credit cards </li></ul></ul>
  11. 11. Credit Statistics <ul><li># of Credit Obligations Per Person </li></ul><ul><li>Past Payment Performance </li></ul><ul><li>Credit Credit Utilization </li></ul><ul><li>Total Credit Utilization </li></ul>13; of which 9 are credit cards & 4 installment 40% of credit card holders carry a balance of < $1000 15% are in excess of $10,000 < than 50% have been 30 days late Only 3 of 10 have been 60 days late 77% have never been 90+ late Excluding mortgage, 48% carry less than $5000 of debt. 37% have more than $10,000 in debt
  12. 12. Credit Statistics <ul><li>Total Available Credit </li></ul><ul><li>Length of Credit History </li></ul><ul><li>Credit Inquiries </li></ul>Typical consumer has access to $19,000 on credit cards More than half use < 30% of limit 1 in 17 use > 80% of card limit Avg. consumer has had only 1 inquiry in the past year. Fewer than 6% had 4+ in last year Avg. oldest trade line is 14 yrs 25% have 20+ yrs of credit history Only 1 in 20 have < 2 yrs of history
  13. 13. Unlocking Credit & Identity Theft Your Credit Report
  14. 14. What’s In My Credit Report? <ul><li>Identifying Information </li></ul><ul><ul><li>Name, Address, Social Security #, DOB, employment & residence history. This info is not used in determining your credit score </li></ul></ul><ul><li>Trade Lines </li></ul><ul><ul><li>Your accounts, payment history & specific details of each acct </li></ul></ul><ul><li>Credit Inquiries </li></ul><ul><ul><li>List of all creditors that have accessed your credit recently </li></ul></ul><ul><li>Public Record and Collection Items </li></ul><ul><ul><li>Information collected from state & county courts including overdue debt from collection agencies, bankruptcies, liens, child support & judgments </li></ul></ul>
  15. 15. Who Keeps Track of My Credit <ul><li>The Three Credit Bureaus </li></ul><ul><ul><li>Experian </li></ul></ul><ul><ul><li>Equifax </li></ul></ul><ul><ul><li>TransUnion </li></ul></ul><ul><li>You have the right to access Your Credit Report </li></ul><ul><li>Once Each Year from each or 3 times a year total </li></ul><ul><li>AnnualCreditReport.com </li></ul>
  16. 16. Types of Credit Reports <ul><li>One Bureau Credit Report </li></ul><ul><ul><li>Most Companies Use </li></ul></ul><ul><ul><li>Consumer can pull for free </li></ul></ul><ul><ul><li>One or no FICO scores </li></ul></ul><ul><li>Tri-Merged Credit Report </li></ul><ul><ul><li>Most Mortgage Lenders Use </li></ul></ul><ul><ul><li>Combines all three Bureaus </li></ul></ul><ul><ul><li>All three FICO scores </li></ul></ul><ul><ul><li>*Consumer Report </li></ul></ul><ul><ul><li>More Secure: No Social security or account numbers shown </li></ul></ul><ul><ul><li>Free if denied for credit, must request in writing </li></ul></ul>
  17. 17. Credit Score Facts & Myths <ul><li>Myth </li></ul><ul><li>Score solely determines whether I get credit </li></ul><ul><li>A poor score will haunt me forever </li></ul><ul><li>Credit scoring is unfair to certain types of people </li></ul><ul><li>My Score will drop if I apply for new credit </li></ul><ul><li>Fact </li></ul><ul><li>Lenders use many factors in determining whether to loan. </li></ul><ul><li>Just the opposite is true. It is a snapshot of your risk at that particular moment. </li></ul><ul><li>No, credit score only considers credit related information. </li></ul><ul><li>Not Necessarily. You have 30 days on auto and mortgage inquiries to make inquiries without penalty. </li></ul>
  18. 18. Fixing Mistakes & Errors <ul><li>How Credit Mistakes are Made </li></ul><ul><li>Person applies under different names (Robert Jones vs. Bob Jones) </li></ul><ul><li>Clerical Errors in reading or inputting </li></ul><ul><li>Loan or Credit Card payments applied to wrong account </li></ul><ul><li>Fixing Credit Errors </li></ul><ul><li>Contact both Bureau & Creditor to dispute </li></ul><ul><ul><li>Online or mail </li></ul></ul><ul><li>Both are responsible for correcting the error </li></ul>
  19. 19. Sample Credit Report Dispute Letter <ul><li>Date </li></ul><ul><li>Your Name </li></ul><ul><li>Your Address </li></ul><ul><li>Your City, State, Zip Code </li></ul><ul><li>Complaint Department </li></ul><ul><li>Name of Credit Bureau </li></ul><ul><li>Address </li></ul><ul><li>City, State, Zip Code </li></ul><ul><li>Dear Sir or Madam: </li></ul><ul><li>I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the </li></ul><ul><li>report I received. </li></ul><ul><li>This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is </li></ul><ul><li>inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted ( or request another </li></ul><ul><li>specific change) to correct the information. </li></ul><ul><li>Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting </li></ul><ul><li>my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible. </li></ul><ul><li>Sincerely, </li></ul><ul><li>Your name </li></ul><ul><li>Enclosures: (list what you are enclosing) </li></ul>
  20. 20. Know Your Rights <ul><li>Right to receive copy of your credit report from each bureau once per year </li></ul><ul><li>To know the name of anyone who has received your credit report or inquired </li></ul><ul><li>Receive your credit report, upon your written request, if you have been denied for credit </li></ul><ul><li>Have right to add a summary explanation to your credit report regarding disputes </li></ul>
  21. 21. Credit Monitoring Options <ul><li>Review your credit report from each bureau annually </li></ul><ul><ul><li>Federal law gives you the right to one free copy of your credit </li></ul></ul><ul><ul><li>Annualcreditreport.com ( consumer site) </li></ul></ul><ul><ul><li>Other sites like freecreditreport.com sell their services </li></ul></ul><ul><li>Subscribe to Monthly Monitoring Service: </li></ul><ul><ul><li>Use one of the three bureaus monitoring service </li></ul></ul><ul><ul><li>Costs range from $5 to $25 for basic monthly monitoring </li></ul></ul>
  22. 22. Lock or Freeze Your Credit <ul><li>A Security Freeze means your file cannot be shared with potential creditors. </li></ul><ul><li>No new accounts can be opened without contacting you & getting your permission </li></ul><ul><li>Can prevent new account identity theft </li></ul><ul><li>Can be temporarily unfrozen </li></ul><ul><li>$15 per Bureau per person </li></ul>Step by Step Guide: http://www.consumersunion.org/pdf/security/securityNE.pdf
  23. 23. Identity Theft “ Prevention is Better than the Cure”
  24. 24. ID Theft <ul><li>Statistics – 11 million </li></ul><ul><li>How they get your info </li></ul><ul><li>6 Warning Signs </li></ul><ul><li>How To Protect Yourself </li></ul><ul><li>What to do if Identity Theft Strikes You? </li></ul>
  25. 25. 2009 Statistics <ul><li>11.1 Million Adult Victims </li></ul><ul><li>Increased by 12% </li></ul><ul><li>Highest increase in last 7 years </li></ul><ul><li>Total Fraud Amount: $54 Billion </li></ul><ul><li>4.8% of the U.S. population </li></ul><ul><li>was a victim of identity fraud </li></ul><ul><li>Average Fraud Amount : $4841 </li></ul>
  26. 26. 2009 Statistics <ul><li>13% of fraud </li></ul><ul><li>Committed by someone </li></ul><ul><li>the victim knew </li></ul><ul><li>21 hours & $373 </li></ul><ul><li>Time & Money spent out of pocket resolving the crime </li></ul><ul><li>18-24 Year Olds </li></ul><ul><li>Most likely victims </li></ul><ul><li>Time Until Discovery: </li></ul><ul><li>38-48% within 3 months </li></ul><ul><li>9-18% take 4+ years </li></ul><ul><li>Odds of Thief Going to Jail: </li></ul><ul><li>1 in 1000 </li></ul><ul><li>Estimated </li></ul><ul><li>$221 Billion a year </li></ul><ul><li>lost by businesses worldwide </li></ul>
  27. 27. How they get your Personal Info <ul><li>Lost or stolen Wallets </li></ul><ul><li>Card Skimming </li></ul><ul><li>Mobile Smartphone </li></ul><ul><li>Mailbox raiding/dumpster diving </li></ul><ul><li>Online Methods-Email </li></ul><ul><li>Data Breaches </li></ul><ul><li>“ Friendly Theft” </li></ul>
  28. 28. By The Numbers <ul><li>43% </li></ul><ul><li>From Stolen Wallets </li></ul><ul><li>Or Documents </li></ul><ul><li>11% </li></ul><ul><li>Stolen Online </li></ul><ul><li>38% </li></ul><ul><li>Debit/Credit Card </li></ul><ul><li>Numbers Stolen </li></ul><ul><li>Albert Gonzalez </li></ul><ul><li>30 Million credit card and account numbers stolen </li></ul><ul><li>Several large corporate databases hacked </li></ul><ul><li>Over $200 Million in Losses </li></ul>
  29. 29. 6 Warning Signs of Identity Theft <ul><li>Receive billing statements for credit you’ve never applied for </li></ul><ul><li>Your Credit Card bill doesn’t come at all </li></ul><ul><li>You billing statement includes charges you didn’t make </li></ul><ul><li>Your credit card is unexpectedly declined for being over the limit </li></ul><ul><li>Calls from debt collectors about accounts that aren’t yours </li></ul><ul><li>Unexpectedly denied for a credit card or loan </li></ul>
  30. 30. How to Protect Yourself <ul><li>Monitor Your Credit </li></ul><ul><li>Computer Security </li></ul><ul><li>Protect Sensitive Information </li></ul>
  31. 31. Monitor Your Credit! <ul><li>Alert you to new credit & inquiries </li></ul><ul><li>Some monitor web for your info </li></ul><ul><li>Services cost $10-20 per month </li></ul><ul><li>Critics say you can do most of this </li></ul><ul><li>Identity Theft Services </li></ul><ul><ul><li>Life Lock </li></ul></ul><ul><ul><li>ID Watchdog </li></ul></ul>
  32. 32. Basic Computer Security <ul><li>Password protect your home wireless network </li></ul><ul><li>Don’t download attachments w/o scanning </li></ul><ul><li>Keep Up to Date Security Software </li></ul><ul><ul><li>Anti virus & anti spy ware </li></ul></ul><ul><li>Use a Firewall </li></ul><ul><li>Install Windows Updates </li></ul><ul><li>Be careful where you click-phishing </li></ul>
  33. 33. Basics of Protecting Your Information <ul><li>Use a Shredder! </li></ul><ul><li>Opt out of pre-approved credit offers </li></ul><ul><li>Safeguard your SS# </li></ul><ul><li>Don’t email sensitive information </li></ul><ul><li>Don’t print SS / Driver’s license # on checks </li></ul><ul><li>Consider a Locked Mailbox or PO Box </li></ul><ul><li>Cut up Old Credit Cards </li></ul><ul><li>Shop securely online </li></ul>
  34. 34. What to do if it happens to you? <ul><li>Notify, monitor & freeze Credit </li></ul><ul><li>Contact creditors immediately if an account is opened </li></ul><ul><li>Report to Law Enforcement </li></ul><ul><li>If checks, ATM, Debit cards or Bank accts are stolen, contact your Bank immediately </li></ul><ul><li>Report to FTC </li></ul><ul><li>Keep good records </li></ul>http://www.privacyrights.org/fs/fs17a.htm
  35. 35. In Summary….Lets Review <ul><li>What is FICO? </li></ul><ul><ul><li>Range & Averages </li></ul></ul><ul><ul><li>How it helps you </li></ul></ul><ul><ul><li>What makes up your score </li></ul></ul><ul><ul><li>Tips to improve your score </li></ul></ul><ul><ul><li>Credit Statistics </li></ul></ul><ul><li>Your Credit Report </li></ul><ul><ul><li>What’s inside </li></ul></ul><ul><ul><li>Myths and Truths </li></ul></ul><ul><ul><li>Errors & How to Correct them </li></ul></ul><ul><ul><li>Your Rights </li></ul></ul><ul><ul><li>How to monitor & freeze your credit </li></ul></ul><ul><li>Identity Theft </li></ul><ul><ul><li>Statistics </li></ul></ul><ul><ul><li>How they get your info </li></ul></ul><ul><ul><li>6 Warning Signs </li></ul></ul><ul><ul><li>How to Protect Yourself </li></ul></ul><ul><ul><li>What to do if it happens </li></ul></ul>
  36. 36. Credit Bureaus <ul><li>Transunion </li></ul><ul><ul><li>1-800-680-7289 </li></ul></ul><ul><ul><li>www.transunion.com </li></ul></ul><ul><ul><li>Fraud Victim Division </li></ul></ul><ul><ul><li>P.O. Box 6790 </li></ul></ul><ul><ul><li>Fullerton, CA 92834-6790 </li></ul></ul><ul><li>Experian </li></ul><ul><ul><li>1-888-397-3742 </li></ul></ul><ul><ul><li>www.experian.com </li></ul></ul><ul><ul><li>P.O. Box 9532 </li></ul></ul><ul><ul><li>Allen, TX 75013 </li></ul></ul><ul><li>Equifax </li></ul><ul><ul><li>1-800-525-6285 </li></ul></ul><ul><ul><li>www.equifax.com </li></ul></ul><ul><ul><li>P.O Box 740241 </li></ul></ul><ul><ul><li>Atlanta, GA 30374-0241 </li></ul></ul>
  37. 37. Other resources <ul><li>Annual Credit Report </li></ul><ul><ul><li>www.annualcreditreport.com </li></ul></ul><ul><li>Reduce Telemarketer Calls </li></ul><ul><ul><li>1-888-382-1222 </li></ul></ul><ul><ul><li>www.donotcall.gov </li></ul></ul><ul><li>Protect Your Privacy </li></ul><ul><ul><li>Remove your name from pre-approved credit applications </li></ul></ul><ul><ul><li>www.optoutprescreen.com </li></ul></ul><ul><li>U.S. Department of State </li></ul><ul><ul><li>Report lost or stolen passport </li></ul></ul><ul><ul><li>1-877-487-2778 </li></ul></ul><ul><ul><li>www.travel.state.gov </li></ul></ul><ul><li>Social Security Administration </li></ul><ul><ul><li>Only to replace a missing or stolen social security card </li></ul></ul><ul><ul><li>www.ssa.gov </li></ul></ul><ul><li>Federal Trade Commission </li></ul><ul><ul><li>1-877-438-4338 </li></ul></ul><ul><ul><li>www.consumer.gov/idtheft </li></ul></ul>
  38. 38. Other Resources <ul><li>Identity Theft 911 </li></ul><ul><ul><li>Extensive Online center </li></ul></ul><ul><ul><li>www.identitytheft911.org </li></ul></ul><ul><li>Privacy Rights Clearinghouse </li></ul><ul><ul><li>Nonprofit consumer info </li></ul></ul><ul><ul><li>www.privacyrights.org </li></ul></ul><ul><li>Identity Theft Resource Center </li></ul><ul><ul><li>Non-profit support </li></ul></ul><ul><ul><li>www.idtheftcenter.org </li></ul></ul><ul><li>US Postal Service </li></ul><ul><ul><li>www.usps.com </li></ul></ul><ul><li>State Attorney General </li></ul><ul><ul><li>www.naag.org </li></ul></ul>
  39. 39. Learn More…. Visit our website PinnacleBankRealEstate.com 402-960-0330 Credit and Identity Theft Education For a Copy of this presentation Click “Home”, then “Credit and Identity Theft” Input pinnaclebank as password 8 Steps to Effective Home Buying Education Click 8 Steps To Buy at the top

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