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Understanding credit reports_powerpoint_presentation_1.14.2.g1

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  • 1. 1.4.2.G1Unders tandingCredit ReportsFamily Economics & Financial EducationTake Charge of Your Finances
  • 2. 1.4.2.G1Credit Report DetectivesMeet Isabella, your new client:• About to graduate from college• In extreme debt• Concerned about finding a job• Doesn’t understand her credit report YOUR MISSION: Help Isabella understand her credit report, identify what she did to get into this situation, and decide what she can do to improve her credit report. © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 3. 1.4.2.G1 The Credit ProcessCredit – when goods, services, and/or money are received in exchange for a promise to pay back a definite sum of money at a future date. © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 4. 1.4.2.G1 Isabella’s Story IN SMALL GROUPS: READ ISABELLA’S SCENARIO• What is your analysis of her situation? • Does she need your help? • Why? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 5. 1.4.2.G1 Credit History ReportingWhat they do AdditionalInformation © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 6. 1.4.2.G1 Credit Reporting Agencies• Acquire information from: © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 7. 1.4.2.G1 Information in a Credit ReportInformation can be divided into 4 categories:• Personal Information• Accounts Summary• Public record items related to credit• Credit Inquiries Lenders may or may not report information to all three credit reporting agencies. An individual’s information may be different in each report. © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 8. 1.4.2.G1 Personal Information Isabella’s PersonalPersonal Infor mation Infor mation:• Name and aliases • Name – Isabella G. Langley• Current and past addresses • Addresses – 101 Hopeful Ave. &• Social security number 695 Parent Street• • Date of birth – 05/04/86 Date of birth • Telephone numbers –• Employment history 555-354-2368 & 555-198-2358 • Employers – Lucky’s Restaurant FIND ISABELLA’S & Jane’s Daycare PERSONAL INFORMATION © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 9. 1.4.2.G1 Accounts SummaryAccounts Summar y• Types of accounts Isabella’s Accounts• Date the account was • Sam’s Electronic World opened • City of Anywhere• Credit limit or loan • U.S. Department of Education amount • Financial Institution School• Account balance Loan• Payment history, including • Shop ‘Til You Drop Store missed or late payments Credit Card WHAT LENDERS • Love to Read Store Credit Card DOES ISABELLA • The Free Money Credit Card HAVE ACCOUNTS WITH? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 10. 1.4.2.G1 Accounts Summary DOES ISABELLA HAVE ANY LATE OR MISSED PAYMENTS ON ACCOUNTS ? Isabella’s Late or Missed Payments • Sam’s Electronic World • Past due • Store Credit Card • Occasional late payments © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 11. 1.4.2.G1 Public record items related to creditPublic Record Items Isabella’s Public Record• Accounts turned over to Items collection agencies • City of Anywhere • In Collection• Public records • Bankruptcy • Tax liens • Legal suits • ForeclosuresIDENTIFYPUBLIC RECORDITEMSIN ISABELLA’SREPORT © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 12. 1.4.2.G1 Credit Inquiries• Requests for an individual’s credit report• Completed by: • Insurance agencies • Potential credit companies • Financial institutions • Landlords WHAT INQUIRIES • Potential employers, etc. DOES ISABELLA HAVE ON HER REPORT? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 13. 1.4.2.G1 Credit Inquiries Not all credit inquiries are the same!Type of inquiry Soft check Hard checkDo they impact Not usually Yesyour creditscore?Examples •Individuals checking Permission given by their credit reports the individual when •Credit card companies seeking credit pre-approving •Credit card individuals •Automobile loan •Pre-employment checks •Insurance Individuals should avoid too many hard credit checks at one time! © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 14. 1.4.2.G1 Isabella’s Report InquiriesType of inquiry Soft checks Hard checksExamples •A Very Big Bank •Shop ‘Til You •Need More Credit Drop •Keeping You Insured •The Dream Sales Job © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 15. 1.4.2.G1 Medical Information © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 16. 1.4.2.G1 Equal Credit Opportunity Act• Prohibits credit discrimination on the basis of: • Race • Creditors may ask for this Religion information (except • Marital status religion) in certain • Nationality situations, but may not use it to discriminate when • Gender deciding whether to grant • Age you credit © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 17. 1.4.2.G1 Credit ScoresMathematical tool created to help a lender evaluate therisk associated with lending a consumer money•Based upon information in the credit report•At a particular point in time•Numeric “grade” of a consumer’s financial reliability•Used by lenders to determine a consumer’s risk ofdefaulting on a loan © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 18. 1.4.2.G1 Credit Scores• Most common scoring system is FICO WHAT IS ISABELLA’S• Credit scores range from SCORE? 300-850, with 850 being the best score © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 19. 1.4.2.G1 Credit Score Impact THIS IS BA SE D UPON A 30 YE A R FIXE D MORTG A GE RA TE FOR A $300,000 L OA NFIC O Score Interest Monthly 30 Year Rate Payment A mount760 5.9% $1 ,787 $643,320650 7.2% $2,047 $736,920590 9.3% $2,500 $900,000 $256,680 saved over the lifetime of this loan because of a good credit score! © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 20. 1.4.2.G1How Credit Scores are Determined © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 20Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 21. 1.4.2.G1 Payment History• The timely manner in which a consumer did or did not repay debt• Includes: • Several types of credit accounts • Late or missed payments • Public records and collection items © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 22. 1.4.2.G1 Payment HistoryWHAT IS ISABELLA’S • Found in status columnPAYMENT HISTORY? • Payment history • Sam’s Electronic World is past dueWHAT IMPACT • City of Anywhere is in collectionDOES THIS HAVE ON • Shop ‘Til You Drop has occasional lateHER CREDIT SCORE? payments • Love to Read was closed and never late • The Free Money Credit Card is paid on time • Credit score impact • Negative • Too many late accounts © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 23. 1.4.2.G1 Outstanding Debt• The total dollar amount of debt currently held• Includes balances on all reported accounts• When a high percentage of debt is used, then it negatively impacts a score © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 24. 1.4.2.G1 Outstanding DebtHOW MUCH TOTAL • Total debtDEBT DOES ISABELLA • Found in recent balanceHAVE? column • $37,325HOW MUCH • Available creditAVAILABLE CREDIT IS • Found in credit limit columnISABELLA USING? • $37,546 • ImpactWHAT IMPACT DOES • NegativeTHIS HAVE ON HER • $37,546-$37,325 = $221CREDIT SCORE? she is using almost all her available credit © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 25. 1.4.2.G1 Length of Credit History• Length of time a consumer has held credit accounts• Includes how long ago credit accounts were established• A longer credit history will generally increase a credit score © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 26. 1.4.2.G1 Length of Credit HistoryWHEN DID ISABELLA • Credit historyFIRST BEGIN HER • Found in date openedCREDIT HISTORY? columnIF ISABELLA KEEPS • 08/05 U.S. Dept. ofHER EducationFREE MONEY CREDIT • Free Money Credit CardCARD OPEN FOR • Score will improveANOTHER 10 YEARSAND PAYSOFF THE BALANCE,WHAT WILL HAPPEN? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 27. 1.4.2.G1 Pursuit of New Credit• Assesses how many accounts have been opened recently and the type of account• Includes the number of recently opened accounts as well as requests for new credit• Opening too many types of accounts in a short period of time has a negative affect © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 28. 1.4.2.G1 New CreditHAS ISABELLA • Additional creditPURSUED ANY • Shop ‘Til You Drop inADDITIONAL CREDIT August 2008SINCE JANUARY 2008? • Impact of seekingIF ISABELLA additional creditACQUIRED • Credit score will go downANOTHER CREDITCARD AND SHOPPEDFORAN AUTOMOBILELOAN, WHAT WOULDHAPPEN TO HER © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of ArizonaSCORE?
  • 29. 1.4.2.G1 Types of Credit in Use• Analyzes the types of credit in use• Credit cards, retail cards, mortgages, automobile loans, etc.• Variety is generally good to have © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 30. 1.4.2.G1 Credit in UseWHAT TYPES OF • TypesCREDIT DOES • Credit card (revolving)ISABELLA HAVE? • School loan (installment) • Private school loanWHAT AREADDITIONAL FORMS (installment)OF CREDIT SHE MAY • Store cards (revolving)SEEK? • Additional forms • Mortgage • Automobile loan © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 31. 1.4.2.G1 Information not included in a FICO score• FICO score is only based upon credit use• Information not included is: • Personal information such as age, where you live, marital status, race, color, religion, national origin, gender • Employment information • Interest rates charged on accounts • Overall wealth (assets an individual may have) These variables may still be considered when a lender reviews a loan application. © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 32. 1.4.2.G1 Positive vs. Negative Credit ImpactPositive Ne gative• Informs the lender a • Informs the lender a consumer is: consumer is: • Financially responsible • Not financially responsible • Less risk • May be a higher risk• Benefits to the consumer • Impact on the consumer • Lower interest rates • May pay higher interest • Access to additional credit rates • May not be able to qualify IS ISABELLA A for credit POSITIVE • May limit employment OR A NEGATIVE RISK? opportunities WHY? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 33. 1.4.2.G1 Activity - What You Do Makes a Difference1. Instructor will read a scenario2. Determine if the scenario will have a positive or negative impact on an individual’s credit report3. Move to the side of the room representing your selected answer4. Be prepared to explain “why” © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 34. 1.4.2.G1 Activity Negative Joey owes the store the money which was agreed upon in the contract May be responsible for additional fees He may be referred to collections © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 34Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 35. 1.4.2.G1 Activity Positive An excellent habit for building a positive report © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 35Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 36. 1.4.2.G1 Activity Negative Fernando is responsible for the movie replacement Could be reported to collections © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 36Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 37. 1.4.2.G1 Activity Negative Cassie has probably already been referred to collections Will owe for the parking tickets and additional fees © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 37Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 38. 1.4.2.G1 Activity Positive Demonstrated the ability to responsibly use credit © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 38Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 39. 1.4.2.G1 Activity Negative Although Corey is paying his bill, he is doing so late! © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 39Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 40. 1.4.2.G1 Activity Positive All payments were made in time Having automatic withdrawals with the money in the account is a good practice © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 40Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 41. 1.4.2.G1 Activity Negative This is too many inquiries for new credit at one time from a variety of types of stores © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 41Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 42. 1.4.2.G1 Activity Negative A variety of types of credit may be good, however, Jessica’s balances are at the maximum level © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 42Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 43. 1.4.2.G1 Activity Negative Jon is delinquent on the account. If he contacts the loan company, they may be able to work with him © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 43Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 44. 1.4.2.G1 Positive Credit Practices PositivePractice good banking techniques, such as keeping a checkbookbalanced, managing accounts online, and not bouncing anychecksPay bills consistently and on timeMaintain reasonable amounts of unused creditApply for credit sparingly, thus keeping credit inquiries to aminimumCheck credit reports annually and search for errors © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 44 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 45. 1.4.2.G1 Negative Credit Practices NegativeHaving non-sufficient funds (NSF) when writing checks, alsoknown as bouncing checksRoutinely paying late on credit cards, utility, and cell-phonebillsMaxing out limits on credit cardsNumerous credit applications in a short period of time © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 45 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 46. 1.4.2.G1 When Credit is not established• Although the following are all positive financial habits, no credit is established when: • Credit is never used • Accounts are not in own name • Cash is paid for all major purchases • Phone and utility bills are paid on time • It only negatively impacts a score if payments are late © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 46 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 47. 1.4.2.G1 Building credit history• Important for consumers to build a credit history to be able to purchase items on credit • For example – house, vehicle• Having no credit history may be just as challenging to a consumer as having a negative history © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 47 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 48. 1.4.2.G1 2009 CARD Act Changed how young adults receive certain types of creditTo receive a credit card: • Generally must be 21 years of age or older UNLESS • Show documentation of sufficient income • Have a co-signer © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 48 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 49. 1.4.2.G1 Establishing Credit• Strategies to build credit include If someone acquiring and positively is a co- managing small lines of credit signer on a • Co-signer an account, they are • Secured Credit card equally as • Require a cash security deposit to responsible ensure payment of the card and their • Small loan from financial credit report institution is impacted.DOES ISABELLA HAVE ANY CO-SIGNERS?WHAT IMPACT DOES HER ACTIONS HAVE ONTHEM? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 49 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 50. 1.4.2.G1 Requesting A Credit Report• One free credit report annually from each of the three credit reporting agencies• Credit scores are available for a small fee Access the website: annualcreditreport.com Calling toll free: 1-877-322-8228 Send a written request: Annual Credit Report Request Service PO box 105281 Atlanta, GA 30348-5281 © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 50 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 51. 1.4.2.G1Annualcreditreport.comannualcreditreport.com - Only government sponsored Web site Other sites may be fraudulent or charge a fee © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 51 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 52. 1.4.2.G1 Mistakes in Credit Reports• Important to check each credit report annually to correct mistakes• Two common errors • Fraud (identity theft) • Mistaken identity • When a lender reports a transaction on the wrong person’s credit report © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 52 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 53. 1.4.2.G1 Fair Credit Reporting Act• Gives consumers the right to review and correct their report• If a person is denied credit, they have the right to request their credit report from the credit reporting agency • If within 60 days it is free of charge © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 53 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 54. 1.4.2.G1Correcting Errors on Credit Reports © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 54Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 55. 1.4.2.G1Correcting Errors on Credit Reports © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 55Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 56. 1.4.2.G1 Credit Repair Agencies• Offer to help a consumer “fix” his/her negative credit report• According to the Better Business Bureau (BBB) and the Federal Trade Commission (FTC): • Consumers can do just as good of a job repairing their credit report errors as a fee based debt repair agency • Be cautious of debt repair agencies promising instant help because there is no immediate fix for negative credit © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 56 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 57. 1.4.2.G1 Advice Isabella was givenFrom Angie From George• Credit ratings improve as • Shopping around too much people get older and income for credit is not good because increases it increases inquiries• Isabella’s credit score will • Opening new accounts, even improve when she: if not used, provides evidence • Moves to a better side of town of credit worthiness • Gets a better interest rate on • Close old accounts, including loans those with loans not paid on • Is promoted time to wipe the slate clean WAS THE ADVICE GOOD? WHY OR WHY NOT? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 57 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 58. 1.4.2.G1CREDIT REPORTDETECTIVES ADVICE• Will Isabella receive her dream job?• What advice would you give Isabella to improve her credit report and score? • What should she do immediately? • What recommendations would you suggest she employ in the near future? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 58 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  • 59. 1.4.2.G1ANY QUES TIONS? © Family Economics & Financial Education – Revised April 2010– Credit Unit – Understanding Credit Reports – Slide 59 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona