MONEY MATTERSMONEY MATTERSClass 5Class 5

Presented by:Presented by:

Susan HuffSusan Huff

Credit ReportCredit Report

A summary of your financial history. A summary of your financial history.

Credit ReportCredit Report

Each credit report list:Each credit report list: Credit accountsCredit accounts, including credit cards, , including credit cards,

auto loans, student loans, and mortgages auto loans, student loans, and mortgages Creditor and account number Creditor and account number Balance Balance Date opened Date opened Payment history Payment history Current status, such as “OK”, “Closed by Current status, such as “OK”, “Closed by

customer”, “30 days late payment”, etc.customer”, “30 days late payment”, etc.

Inquiries:Inquiries: recent applications for new recent applications for new credit credit

Collections:Collections: when a collection agency is when a collection agency is seeking you to repay a debt seeking you to repay a debt

Public Records:Public Records: court judgments such as court judgments such as a bankruptcy, foreclosure, or tax lien a bankruptcy, foreclosure, or tax lien

Credit ReportCredit Report

Credit Reporting Agencies:Credit Reporting Agencies: ExperianExperian Trans UnionTrans Union EquifaxEquifax

Credit reporting agencies track how well Credit reporting agencies track how well you repay your loans.you repay your loans.

Sample Credit ReportSample Credit Report

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

Creditor inquiries – 1 to 2 yearsCreditor inquiries – 1 to 2 years Employer inquires – 2 yearsEmployer inquires – 2 years

Delinquencies – 7 yearsDelinquencies – 7 years Collection – 7 yearsCollection – 7 years Garnishment – 7 yearsGarnishment – 7 years Repossessions – 7 yearsRepossessions – 7 years Court Orders - 7 YearsCourt Orders - 7 Years Eviction for non-payment – 7 yearsEviction for non-payment – 7 years Missed Child Support – 7 yearsMissed Child Support – 7 years Foreclosures – 7 yearsForeclosures – 7 years

Chapter 13 Bankruptcy – 7 Years from Chapter 13 Bankruptcy – 7 Years from the date filed.the date filed.

Chapter 7,11 & 12 Bankruptcy – 10 years Chapter 7,11 & 12 Bankruptcy – 10 years from the date filed.from the date filed.

Tax Liens – 7 years from the date paid or Tax Liens – 7 years from the date paid or indefinitely if not paidindefinitely if not paid

How long does positive How long does positive information stay on my information stay on my credit report?credit report?

Active positive information can remain Active positive information can remain indefinitely.indefinitely.

If an account is closed that has been If an account is closed that has been positive, then it will remain on your report positive, then it will remain on your report for 10 years after the date of last activity.for 10 years after the date of last activity.

CREDIT SCORECREDIT SCOREA number that summarizes your credit risk based A number that summarizes your credit risk based

on your credit report, at a particular point in on your credit report, at a particular point in time. time.

Determines who qualifies for credit, at what interest Determines who qualifies for credit, at what interest rate and what credit limits. rate and what credit limits.

statistical analysis of a person’s credit reportstatistical analysis of a person’s credit report fast, fair, objective estimate of your credit riskfast, fair, objective estimate of your credit risk very predictive of riskvery predictive of risk increased the availability of credit increased the availability of credit reduced the cost of providing creditreduced the cost of providing credit

Who can access my credit Who can access my credit score?score?

The Fair Credit Reporting Act (FCRA) The Fair Credit Reporting Act (FCRA) restricts who can access your credit restricts who can access your credit reportreport

Business have a right to check your Business have a right to check your credit report before they agree to do credit report before they agree to do business with you.business with you.

Traditional uses of Traditional uses of Credit ScoreCredit Score

Lending InstitutionsLending Institutions BanksBanks Credit Unions Credit Unions Finance Companies Finance Companies

Credit Card issuersCredit Card issuers Auto DealersAuto Dealers EmployersEmployers

Non-Traditional uses of Non-Traditional uses of Credit ScoreCredit Score

Auto InsuranceAuto Insurance Homeowner’s InsuranceHomeowner’s Insurance Utility CompaniesUtility Companies LandlordsLandlords State and local child support enforcement State and local child support enforcement

agenciesagencies

FICO (Fair Isaac Corporation)FICO (Fair Isaac Corporation) 90% of lenders90% of lenders 300 – 850, higher is better300 – 850, higher is better Most credit scores fall between 600 to 750Most credit scores fall between 600 to 750

NextGen ScoreNextGen Score CE ScoreCE Score Vantage ScoreVantage Score

501 – 990501 – 990 Assigns letter grade (A to F) to specific Assigns letter grade (A to F) to specific

score ranges.score ranges.

What is a good score?What is a good score?

Based on FICO 300-850Based on FICO 300-850 750 or above 750 or above ExcellentExcellent 700700 GoodGood 650650 FairFair 600600 PoorPoor Below 600Below 600 high riskhigh risk

CREDIT SCORE FACTORSCREDIT SCORE FACTORS

FICO High AchieversFICO High Achievers

93% have missed no payments93% have missed no payments Oldest account was opened 19 years agoOldest account was opened 19 years ago Average age of accounts is 6-12 yearsAverage age of accounts is 6-12 years Ratio of revolving balances to credit limits 7%Ratio of revolving balances to credit limits 7% Carry a balance of $1200 or less on non-Carry a balance of $1200 or less on non-

mortgage accountsmortgage accounts Virtually no FICO High Achievers have a public Virtually no FICO High Achievers have a public

record or a collection listed on their credit record or a collection listed on their credit report. report.

Improving Your Credit Improving Your Credit ScoreScore

Correct mistakes / dispute errors on your Correct mistakes / dispute errors on your report.report.

Pay your bills on time.Pay your bills on time. Focus on the negative factors provided Focus on the negative factors provided

with your FICO scorewith your FICO score Reduce balances on credit cards Reduce balances on credit cards Pay off Debt rather than moving it aroundPay off Debt rather than moving it around Don’t close unused credit card accountsDon’t close unused credit card accounts

Interest rates accurate as of February 5, 2010:Interest rates accurate as of February 5, 2010:30 Yr fixed mortgage30 Yr fixed mortgage $200,000$200,000 GEORGIAGEORGIA

FICO® scoreFICO® score APR APR Monthly paymentMonthly payment760-850760-850 4.646%4.646% $1,031$1,031700-759700-759 4.868%4.868% $1,058$1,058680-699680-699 5.045%5.045% $1,079$1,079660-679660-679 5.259%5.259% $1,106$1,106640-659640-659 5.689%5.689% $1,159$1,159620-639620-639 6.236%6.236% $1,230$1,230

The higher your FICO® credit score, the The higher your FICO® credit score, the lower your payments!lower your payments!

The higher your FICO® credit score, the The higher your FICO® credit score, the lower your payments!lower your payments!

Interest rates accurate as of February 5, 2010:Interest rates accurate as of February 5, 2010:48 month auto loan48 month auto loan $25,000 $25,000 GEORGIAGEORGIA

FICO® scoreFICO® score APR APR Monthly paymentMonthly payment720-850720-850 5.747% 5.747% $584$584690-719690-719 7.490% 7.490% $604$604660-689660-689 9.577% 9.577% $629$629620-659620-659 13.046%13.046% $671$671590-619590-619 17.794%17.794% $732$732500-589500-589 18.477%18.477% $741$741

Damage Points:Damage Points:HHow mistakes affect FICO scoresow mistakes affect FICO scores

Maxed-out cardMaxed-out card 10-45 points 10-45 points

30 day-late payment30 day-late payment 60-110 points 60-110 points

Debt SettlementDebt Settlement 45-125 points 45-125 points

ForeclosureForeclosure 85-160 points 85-160 points

BankruptcyBankruptcy 130-240 points130-240 points

Free Credit ReportFree Credit Report Once a year, from each credit reporting agencyOnce a year, from each credit reporting agency You may be eligible for an additional free report if:You may be eligible for an additional free report if:

You applied for a loan and were turned down. (within You applied for a loan and were turned down. (within 30 days of your rejection) 30 days of your rejection)

You are unemployed and plan to seek employment in You are unemployed and plan to seek employment in the next 60 daysthe next 60 days

You receive public welfare assistanceYou receive public welfare assistance You have reason to believe your credit file is You have reason to believe your credit file is

inaccurate due to fraud.inaccurate due to fraud.

The State of Georgia offers 1 additional free The State of Georgia offers 1 additional free request per year from each agency.request per year from each agency.

““THE REAL” THE REAL” Free Credit ReportFree Credit Report

www.annualcreditreport.com

The site should look like this:

Pick your

State

then

RequestReport

Next you'll beNext you'll be

asked for someasked for some

personalpersonal

information information suchsuch

as your as your namename,,

date of birthdate of birth,,

addressaddress and and

social securitysocial security..

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

You will then be transferred to the credit reportingYou will then be transferred to the credit reportingwebsite. Be aware that if this menu bar ever goeswebsite. Be aware that if this menu bar ever goesaway, you may have been taken to the wrong site.away, you may have been taken to the wrong site.

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

Congratulations!

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

reporting company you requested.reporting company you requested.

Credit ScoreCredit 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.

Free Credit ScoresFree Credit Scores

creditkarma.comcreditkarma.com quizzle.comquizzle.com Credit.comCredit.com

Consumer Credit Counseling Consumer Credit Counseling ServiceService

Founded in 1964Founded in 1964

Non-profit and member of the National Non-profit and member of the National Foundation for Credit Counseling Foundation for Credit Counseling (NFCC)(NFCC)

http://www.credAbility.org/

1.800.251.22271.800.251.2227

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