The document provides a comprehensive overview of credit reports, detailing their components, the duration of negative and positive information, and the significance of credit scores. It explains the factors influencing credit scores, their implications for creditworthiness, and offers guidance on improving scores. Additionally, it discusses resources for obtaining free credit reports and scores, as well as consumer credit counseling options.

1. MONEY MATTERS
Class 5
Presented by:
Susan Huff

2. Credit Report
A summary of your financial history.

3. Credit Report
Each credit report list:
 Credit accounts, including credit cards,
auto loans, student loans, and
mortgages
 Creditor and account number
 Balance
 Date opened
 Payment history
 Current status, such as “OK”, “Closed by
customer”, “30 days late payment”, etc.

4.  Inquiries: recent applications for new
credit
 Collections: when a collection agency is
seeking you to repay a debt
 Public Records: court judgments such as
a bankruptcy, foreclosure, or tax lien

5. Credit Report
 Credit Reporting Agencies:
 Experian
 Trans Union
 Equifax
 Credit reporting agencies track how well
you repay your loans.

6. Sample Credit Report

14. How long does
negative information
remain on credit
reports?

15.  Creditor inquiries – 1 to 2 years
 Employer inquires – 2 years
 Delinquencies – 7 years
 Collection – 7 years
 Garnishment – 7 years
 Repossessions – 7 years
 Court Orders - 7 Years
 Eviction for non-payment – 7 years
 Missed Child Support – 7 years
 Foreclosures – 7 years

16.  Chapter 13 Bankruptcy – 7 Years from
the date filed.
 Chapter 7,11 & 12 Bankruptcy – 10 years
from the date filed.
 Tax Liens – 7 years from the date paid or
indefinitely if not paid

17. How long does positive
information stay on my
credit report?
 Active positive information can remain
indefinitely.
 If an account is closed that has been
positive, then it will remain on your report
for 10 years after the date of last activity.

18. CREDIT SCORE
A number that summarizes your credit risk based
on your credit report, at a particular point in
time.
 Determines who qualifies for credit, at what interest
rate and what credit limits.
 statistical analysis of a person’s credit report
 fast, fair, objective estimate of your credit risk
 very predictive of risk
 increased the availability of credit
 reduced the cost of providing credit

19. Who can access my
credit score?
 The Fair Credit Reporting Act (FCRA)
restricts who can access your credit
report
 Business have a right to check your
credit report before they agree to do
business with you.

20. Traditional uses of
Credit Score
 Lending Institutions
 Banks
 Credit Unions
 Finance Companies
 Credit Card issuers
 Auto Dealers
 Employers

21. Non-Traditional uses
of Credit Score
 Auto Insurance
 Homeowner’s Insurance
 Utility Companies
 Landlords
 State and local child support
enforcement agencies

22.  FICO (Fair Isaac Corporation)
 90% of lenders
 300 – 850, higher is better
 Most credit scores fall between 600 to 750
 NextGen Score
 CE Score
 Vantage Score
 501 – 990
 Assigns letter grade (A to F) to specific
score ranges.

23. What is a good score?
Based on FICO 300-850
 750 or above Excellent
 700 Good
 650 Fair
 600 Poor
 Below 600 high risk

24. CREDIT SCORE
FACTORS

25. FICO High Achievers
 93% have missed no payments
 Oldest account was opened 19 years ago
 Average age of accounts is 6-12 years
 Ratio of revolving balances to credit limits 7%
 Carry a balance of $1200 or less on non-
mortgage accounts
 Virtually no FICO High Achievers have a public
record or a collection listed on their credit
report.

26. Improving Your Credit
Score
 Correct mistakes / dispute errors on your
report.
 Pay your bills on time.
 Focus on the negative factors provided
with your FICO score
 Reduce balances on credit cards
 Pay off Debt rather than moving it around
 Don’t close unused credit card accounts

27. The higher your FICO® credit score,
the lower your payments!
Interest rates accurate as of February 5, 2010:
30 Yr fixed mortgage $200,000 GEORGIA
FICO® score APR Monthly payment
760-850 4.646% $1,031
700-759 4.868% $1,058
680-699 5.045% $1,079
660-679 5.259% $1,106
640-659 5.689% $1,159
620-639 6.236% $1,230

28. The higher your FICO® credit score,
the lower your payments!
Interest rates accurate as of February 5, 2010:
48 month auto loan $25,000 GEORGIA
FICO® score APR Monthly payment
720-850 5.747% $584
690-719 7.490% $604
660-689 9.577% $629
620-659 13.046% $671
590-619 17.794% $732
500-589 18.477% $741

29. Damage Points:
H ow mistakes affect FICO
scores
Maxed-out card 10-45 points
30 day-late payment 60-110 points
Debt Settlement 45-125 points
Foreclosure 85-160 points
Bankruptcy 130-240 points

30. Free Credit Report
 Once a year, from each credit reporting agency
 You may be eligible for an additional free
report if:
 You applied for a loan and were turned down.
(within 30 days of your rejection)
 You are unemployed and plan to seek employment
in the next 60 days
 You receive public welfare assistance
 You have reason to believe your credit file is
inaccurate due to fraud.
 The State of Georgia offers 1 additional free
request per year from each agency.

31. “THE REAL”
Free Credit Report
www.annualcreditreport.com

32. The site should look like this:
Pick your
State
then
Request
Report

33. Next you'll be
asked for some
personal
information such
as your name,
date of birth,
address and
social security.

34. Select the credit bureaus you want to receive
your free credit report from.

35. You will then be transferred to the credit reporting
website. Be aware that if this menu bar ever goes
away, you may have been taken to the wrong site.

36. You may be offered additional products for a fee. Don’t
check these if you only want your free credit report!

40. Congratulations!

41. Click: “Yes, I want to return to annualCreditReport.com”
and you will be taken to the website of the next
credit reporting company you requested.

42. Credit Score
myfico.com
 Equifax or TransUnion score for $19.95
 Explanation of your credit score and how
lenders view you
 Positive and Negative factors affecting
your score.

43. Free Credit Scores
 creditkarma.com
 quizzle.com
 Credit.com

44. Consumer Credit Counseling
Service
Founded in 1964
Non-profit and member of the National
Foundation for Credit Counseling
(NFCC)
http://www.credAbility.org/
1.800.251.2227

45.  Start checking your credit report 6
months before you plan to obtain new
credit to ensure that you credit report is
accurate and you are doing all you can to
keep your score high.