Transcript
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UnderstandingYour Credit

Report

Presented by:

USE Credit Union

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• How your credit report is used.

• How you can order your own credit report.

• How to dispute incorrect information.

• How your credit score is calculated.

• How can you improve your score.

Today we will cover:

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Credit Reporting Agencies

• Equifax – based in Atlanta, GA

• The main bureau that USE Credit Union uses.

• Experian – (formerly TRW) – based in Orange County, CA

• Pulled for additional information or for comparison.

• TransUnion – based in Chicago, IL

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• Lenders: Purpose is to evaluate your credit-worthiness and level of risk.

• Employers: Before extending an offer of employment.

• Insurance companies: To establish rate premiums.

• Landlords: To evaluate your risk as a tenant

• Used by many companies for marketing and demographic information.

Who is looking at your Credit Report?

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• Information reported monthly or quarterly by financial institutions.

• Most, but not all, financial companies report.

• Smaller institutions may report quarterly or not all.

• Not all institutions report to each of the three main bureaus.

• Reporting is a courtesy, not a requirement or obligation.

Where does this information come from?

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What is in my Credit Report?

� Personal Information

� Credit Account Information/Trade Information

� Public Record Information

� Inquiries

� Collection Information

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Inquiries

• “Soft hit” vs. “hard hit.”

• One inquiry may decrease score by

a few points.

• Inquiries have a greater impact if you have

few accounts or a short credit history.

• 45 day window for auto and mortgage shopping.

• Ignores all inquiries made 30 days

prior to scoring.

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How to obtain a copy of your Credit Report

• Equifax: www.equifax.com

• Experian: www.experian.com

• TransUnion: www.transunion.com

• One free credit report every 12 months

• www.annualcreditreport.com

– Does not provide credit score(available for purchase)

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Reasons to check yourCredit Report

• 1 in 6 reports contain errors.

• Inaccurate information can damage your ability to:

- Buy a house

- Rent an apartment

- Obtain credit or insurance

- Open a checking account

- Get a job

- Signals of ID Theft

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When information is not accurate

• File a dispute with the credit reporting agency.

• Credit reporting agencies are governed by the Fair Credit Reporting Act.

• Disputes filed directly with the creditor are resolved at their discretion.

• Disputed information not verified within 30 days will be blocked from your report.

• Beware of credit clinics: There is nothingthey can do that you can not do yourself.

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FACT ACTAccuracy of Credit Information

• Effective July 1, 2010

• Regulators have identified circumstances when institutions who report information to the Credit Reporting Agencies must investigate disputesabout the accuracy of information on a creditreport when a member makes a request.

• Consumers must submit dispute in writing.

• ** Regulatory changes are taking place that willcontinue to impact credit and credit scores.

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What does this mean?

• Reporting institutions must conduct an investigation on a consumer disputewhen it relates to:

• Whether there is individual or joint liability on an account

• Whether the member is an authorized user of thecredit account

• The type of account, principal balance, scheduled payment, or amount of credit limit being reported

• Current payment status, high balance, date a payment was made, amount of a payment made, or the date the account was opened or closed

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• A 3 digit number between 300 - 850

• Often referred to as the “FICO” score

• A snapshot of your credit risk at a particular point in time

• A numerical value based on information contained in your credit report

What is a Credit Score?

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Benefits of Credit Scoring

• The Credit Score gives lenders a fast, objective measurement of your credit risk:

• Credit decisions are fairer

• Older credit problems count for less

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How your score can save/cost you money

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Components of the FICO Score

35%

30%

15%

10%

10%

Payment History

Amounts Owed

Length of History

New Credit

Types of Credit

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The impact of missing a payment

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Revolving Debt Signals

Balances vs. Credit Limit

• Under 15%:

RELAX

• 15% to 20%:

BE CAUTIOUS

•Over 30%

DANGER

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The Importance of Capacity

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What HURTS your score?

• Missing a payment.

• Credit cards at capacity.

• Closing out credit cards.

• Shopping for credit excessively.

• Opening numerous trades in a short period of time.

• Having more revolving loans in relationto installment loans.

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What does NOT affect your score?

• Income, race, religion, age

• Debt ratio (total monthly payments divided by monthly gross income)

• Length of residence

• Length of employment

• Child support or family obligations(Unless they become collection items)

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Remember

› Your credit report’s accuracy is your responsibility.

› Financial institutions only read the information provided on the report.

› Credit reporting agencies only report the information provided to them.

› It is the consumer’s responsibility to ensure that information is accurate and current.

› Your credit score is one of many factors that creditors look at.

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THANK YOU!

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