© © Experian Information Solutions, Inc. 2001 Confidential and proprietary - not for...

©Experian Information Solutions, Inc. 2001 Confidential and proprietary - not for dissemination


Todd SutcliffeJune 24, 2003

Kansas Council on Economic Education


IntroIntro What is a Credit What is a Credit

BureauBureau

Where Does the Where Does the info come frominfo come from

How is it usedHow is it used

Credit ScoresCredit Scores

Collection ProcessCollection Process

Fair Debt Fair Debt CollectionsCollections

Prevention Prevention

QuestionsQuestions


Paul Harvey RIDDLE:Paul Harvey RIDDLE:

When asked this riddle, 80% of When asked this riddle, 80% of kindergarten kids got the answer, kindergarten kids got the answer,

compared to 17% of Stanford University compared to 17% of Stanford University seniors. seniors.

What is greater than God, More evil than What is greater than God, More evil than the devil, The poor have it, The rich need the devil, The poor have it, The rich need

it, And if you eat it, you'll die?it, And if you eat it, you'll die?


What is a Credit What is a Credit BureauBureau

•New PC name is - Credit Reporting Agencies

They collect, store, and sell

information on one's financial history

and credit use


Why are Credit Bureaus Why are Credit Bureaus needed????needed????

??????


Why are Credit Bureaus Why are Credit Bureaus needed???needed???

$$$$$$It Makes the world go round’It Makes the world go round’



Who Owns the majority of real-Who Owns the majority of real-estate?estate?

Who would like to be a BANK?Who would like to be a BANK?


In 1939, Macy's, one of the largest department stores in the United States, stopped selling for cash only and made

available deferred payment plans. In the years since, the use of credit to make

purchases has become a standard American business practice.

Credit Bureaus make it possible for you to buy furniture, clothes or a car with

ease.


Bankers,Bankers,

I need a loan.I need a loan.

I will repay with I will repay with interest!!!interest!!!



About 200 million people in the United States use credit.

This extension of credit to so many people has made it necessary for lenders of money and businesses that finance goods and services to know with whom they are dealing.


Where Does the Where Does the information come from?information come from?

The credit reporting process really begins with the credit seeker


Where Does the Where Does the information come frominformation come from

The information one supplies on the application and one's subsequent credit

performance (i.e., meeting payments on time) is used at one or more credit bureaus.

Companies that give credit regularly donate to one or all the credit bureaus, all information they have on their credit

customers. The credit bureau then compiles the information on each

individual.


TradeTradepaymenpaymen

tt

CreditCreditdatabasedatabase

PublicPublicrecordrecord

Inquiries Inquiries

ApplicationApplication

Banking, Banking, insurance,insurance,

leasingleasingCollectionsCollections

Where Does the Where Does the information come frominformation come from


Why are Credit Bureaus Why are Credit Bureaus neededneeded

Payment Payment

Interest = $$$Interest = $$$


JONATHAN QUINCY CONSUMER SS: 999-99-9990 E: AJAX HARDWARE 10655 N BIRCH ST 234-56-7891* 2035 BROADWAY SUITE 300 BURBANK CA 91502-1234 123-45-6789* LOS ANGELES CA 90019 RPTD: 11-93 TO 3-96 U 3X DOB: 1/10/1951 RPTD: 4-91 I LAST SUB: 2390446

1314 SOPHIA LN APT 3 E: BELL AUTOMOTIVE SANTA ANA CA 92708-5678 111 MAIN STREET RPTD: 7-93 U 1X RPTD: 10-89 TO 2-90

* 2600 BOWSER ST #312 LOS ANGELES CA 90017-9876 RPTD: 2-91 I

* JACK CONSUMER, JOHN SMITH, JONATHAN SMITH JONES JR

-------------------------------DEMOGRAPHICS ------------------------------PH: 818.555.1111 UR PH: 706.432.9876 IB PH: 213.876.1234 UBDL: CA N2345678901234567890 HM: OWNERGEO: 31 123 456789 0 1234


---------------------------- PUBLIC RECORDS ----------------------------* SO CALIF DISTRICT COURT 11-20-92 12-01-93 3011111 $12,450 CO LIEN REL C#: 45078321 1 BP: B47602109

-------------------------------- TRADES --------------------------------* MOUNTAIN BK 3-93 $43,225-O OPEN 30 3 TIMES 1119999 BI SEC 60 2 5-17-96 $19,330 5-9 (39) 1CCCCCC1CCCCC 3562A0197325346R12345 4-96 $956 $956 2-94/1 CCCCCCCCCCCC

------------------------------ INQUIRIES ------------------------------- HEMLOCKS 5-05-96 2313849 DC BAY COMPANY 5-03-96 2390446 DC $1,500 CHG REV HILLSIDE BANK 3-21-95 2240679 BC


Credit ScoreCredit Score

Distribution. This chart shows the percentage of people who score in specific FICO score ranges. For example, about 5% of U.S. consumers have a FICO score between 500 and 549. A score of 670 places you in the 650-699 range, along with 16% of the total population. (Note that the score ranges shown above are provided for your information, but they do not necessarily correspond to any particular lender's policies for extending credit.)



Credit repayment. The second chart demonstrates the delinquency rate (or

credit risk) associated with selected ranges of the FICO score. In this illustration, the delinquency rate is the percentage of borrowers who reach 90 days past due or worse on any credit account over a two-year period. For example, the delinquency rate of consumers in the 500-549 range is 71%. This means that for every 100 borrowers in this range, approximately 71 will default on a loan, file for bankruptcy, or fall 90 days past due on at least one credit account in the next two years. As a group, the consumers in your score range, 650-699, have a delinquency rate of 15%.


Why are Credit Bureaus Why are Credit Bureaus needed??needed??

Payment Payment

Interest = $$$Interest = $$$

But my credit score is But my credit score is 555555


Collection JeopardyCollection Jeopardy

Borrow money from Borrow money from pessimists they don't expect pessimists they don't expect

it back. it back.

--Steven Wright Steven Wright


More by More by Steven Wright Steven Wright

I'd kill for a Nobel Peace Prize.

Half the people you know are below average.

42.7% of all statistics are made up on the spot.42.7% of all statistics are made up on the spot.

The early bird may get the worm, The early bird may get the worm, but the second mouse gets thebut the second mouse gets the

cheese.cheese.(Think about it some more.)(Think about it some more.)



What dollar amount is What dollar amount is written-off to bad debt written-off to bad debt annually in the U.S.annually in the U.S.



What dollar amount is What dollar amount is written-off to bad debt written-off to bad debt annually in the U.S.annually in the U.S.

$80 BILLION DOLLORS$80 BILLION DOLLORS



How many Bad Checks How many Bad Checks are processed EVERY are processed EVERY Day?Day?



How many Bad Checks How many Bad Checks are processed EVERY are processed EVERY Day?Day?

1.5 Million1.5 Million



How many collection How many collection agencies are there in agencies are there in the United States?the United States?



How many collection How many collection agencies are there in agencies are there in the United States?the United States?

6000 agencies6000 agencies



How much of the 80 How much of the 80 Billion dollars do the Billion dollars do the 6000 agencies recover?6000 agencies recover?



How much of the 80 How much of the 80 Billion dollars do the Billion dollars do the 6000 agencies recover?6000 agencies recover?

About 20%About 20%


Interesting FactsInteresting Facts About 32 million About 32 million households are running households are running an annual deficit of an annual deficit of

$8,160. in 01$8,160. in 01

$11,000 in 03$11,000 in 03


Check Collection Check Collection ProcessProcess

Person Writes Bad Check

Check comes to CB Wichita from our Customer

We Send them a letterand phone calls

If letter is returnedWe send to Skip Dept

No Return Letter We start legal process


Check Collection Check Collection ProcessProcess

JudgmentJudgment

Hearing and Aid’s

Garnishment

Garnishment

Money Returned to our client


Account Collection ProcessAccount Collection Process

Account Collection is similar to Account Collection is similar to Check Collection but we do not Check Collection but we do not have to wait 30 days before going have to wait 30 days before going legal.legal.


Fair Debt CollectionFair Debt Collection

Collection Agencies are regulated Collection Agencies are regulated by the by the

Fair Debt Collection ActFair Debt Collection Act

and the interpretation of the Act and the interpretation of the Act by theby the

Federal Trade CommissionFederal Trade Commission


Fair Debt CollectionFair Debt CollectionWhat debts are covered? Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector? A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you? A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.


Fair Debt CollectionFair Debt CollectionCan you stop a debt collector from contacting you? You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor. See Letter

May a debt collector contact anyone else about your debt? If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.


Fair Debt CollectionFair Debt CollectionWhat types of debt collection practices are prohibited? Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:

use threats of violence or harm; publish a list of consumers who refuse to pay their debts (except to a

credit bureau); use obscene or profane language; or repeatedly use the telephone to annoy someone.

False statements. Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:

falsely imply that they are attorneys or government representatives; falsely imply that you have committed a crime; falsely represent that they operate or work for a credit bureau; misrepresent the amount of your debt; l indicate that papers being sent

to you are legal forms when they are not; or indicate that papers being sent to you are not legal forms when they

are.


Fair Debt CollectionFair Debt CollectionWhat types of debt collection practices are prohibited? Debt collectors also may not state that:

you will be arrested if you do not pay your debt; they will seize, garnish, attach, or sell your property or

wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or

actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not: give false credit information about you to anyone,

including a credit bureau; send you anything that looks like an official document

from a court or government agency when it is not; or

use a false name.


Fair Debt CollectionFair Debt CollectionWhat can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney's fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector's net worth, whichever is less.

Link to Brochure


Federal Trade Commission Federal Trade Commission InterpretationInterpretationSECTION 806 -- HARASSMENT OR ABUSE

Section 806 prohibits a debt collector from any conduct that would "Harass, oppress, or abuse any person in connection with the collection of a debt." It provides six examples of harassment or abuse.

1. Scope. Prohibited actions are not limited to the six subsections listed as [53 Fed. Reg. 50105] examples of activities that violate this provision.

2. Unnecessary calls to third parties. A debt collector may not leave telephone messages with neighbors when the debt collector knows the consumer's name and telephone number and could have reached him directly.

3. Multiple contacts with consumer. A debt collector may not engage in repeated personal contacts with a consumer with such frequency as to harass him. Subsection (5) deals specifically with harassment by multiple phone calls.

4. Abusive conduct. A debt collector may not pose a lengthy series of questions or comments to the consumer without giving the consumer a chance to reply. Subsection (2) deals specifically with harassment involving obscene, profane, or abusive language.


Federal Trade Federal Trade CommissionCommissionSection 806(1) prohibits the "use or threat of use of violence or other criminal means to harm . . . any person."

1. Implied threat. A debt collector may violate this section by an implied threat of violence. For example, a debt collector may not pressure a consumer with statements such as "We're not playing around here--we can play tough" or "We're going to send somebody to collect for us one way or the other."

Section 806(2) prohibits the use of obscene, profane, or abusive language.

1. Abusive language. Abusive language includes religious slurs, profanity, obscenity, calling the consumer a liar or a deadbeat, and the use of racial or sexual epithets.

Link to last rulingLink to last ruling


Prevention and Locating Prevention and Locating ToolsTools

Credit ApplicationsCredit Applications

Information on Checks and Information on Checks and AccountsAccounts

Check MachinesCheck Machines

Skip LocatorSkip Locator

MetroNetMetroNet


Paul Harvey RIDDLE:Paul Harvey RIDDLE:

What is greater than God, More evil than What is greater than God, More evil than the devil, The poor have it, The rich need the devil, The poor have it, The rich need

it, And if you eat it, you'll die?it, And if you eat it, you'll die?

NOTHINGNOTHING


QuestionsQuestions

© © Experian Information Solutions, Inc. 2001 Confidential and proprietary - not for...

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