provide usable information to help you manage and protect your credit worthiness

Credit Credit ConceptsConcepts

Helping People Improve & Protect Their Helping People Improve & Protect Their CreditCredit

Your Name – Your Your Name – Your CompanyCompany

Helping people improve and protect their credit

Credit Concepts

Your Name – Credit ExpertYour Name – Credit Expert

Provide usable information to help Provide usable information to help you manage and protect your credit you manage and protect your credit

worthinessworthiness

Learning ObjectivesLearning ObjectivesUnderstand the Principles of Credit and Understand the Principles of Credit and

FinancingFinancingLearn How to Improve Your Credit ScoresLearn How to Improve Your Credit Scores

Learn How to Protect Your Credit & Learn How to Protect Your Credit & IdentityIdentity

Workshop GoalWorkshop Goal


Credit Concepts


Credit Concepts QuizCredit Concepts Quiz

1. What is a good credit score for obtaining a 1. What is a good credit score for obtaining a mortgage?mortgage?

2. How long can a collection remain on your credit 2. How long can a collection remain on your credit report?report?

3.3. Credit card balances reduce your scores when the Credit card balances reduce your scores when the balance to credit limit is over what percentage?balance to credit limit is over what percentage?

4. What percent of credit reports contain serious 4. What percent of credit reports contain serious errors resulting in denial of credit? errors resulting in denial of credit?

5. What is the leading method of identity theft?5. What is the leading method of identity theft? 6. What can you do to protect yourself from identity 6. What can you do to protect yourself from identity

theft?theft?


Credit Concepts


The 3 C’s of FinancingThe 3 C’s of Financing

CollateralCollateral

CapacityCapacity

CharacterCharacter**

Before 1980:Before 1980:Assets Securing a Assets Securing a LoanLoan Income and Years of Income and Years of EmploymentEmployment

Relationship With Relationship With BankerBanker

After 1980:After 1980:Assets Securing a Assets Securing a LoanLoan

Debt to Income Debt to Income RatioRatio

Credit ScoreCredit Score

** Character now relies on a consumer’s credit score and not a Character now relies on a consumer’s credit score and not a trust relationship.trust relationship.


Credit Concepts


The Cost of Bad CreditThe Cost of Bad Credit

These figures are based on a mortgage loan of $100,000 for 30 years


Credit Concepts


Your Credit ReportYour Credit Report Credit Reporting AgenciesCredit Reporting Agencies

– TransUnion, Equifax, Experian – all profit-making companiesTransUnion, Equifax, Experian – all profit-making companies– Gather and sell data (credit reports) to the financial industry Gather and sell data (credit reports) to the financial industry

Information in Your Credit ReportInformation in Your Credit Report– Personal Info, Trade Lines, Public Records & CollectionsPersonal Info, Trade Lines, Public Records & Collections– Hard InquiriesHard Inquiries (Auto/Mtg. affect score as 1 in a 14-day period. Credit Cards count (Auto/Mtg. affect score as 1 in a 14-day period. Credit Cards count

each time) each time) Soft InquiriesSoft Inquiries (Pulling your own report, promo offers, current lender (Pulling your own report, promo offers, current lender pulls pulls do NOTdo NOT impact score) impact score)

– NOTE: 30% of all reports contain errors that result in credit NOTE: 30% of all reports contain errors that result in credit denialdenial

– All positive and negative accounts report for 7 years from the All positive and negative accounts report for 7 years from the date of last activitydate of last activity, excluding bankruptcies (10 yrs) and unpaid , excluding bankruptcies (10 yrs) and unpaid tax liens (15 yrs)tax liens (15 yrs)


Credit Concepts


FICO - Fair Isaac CorporationFICO - Fair Isaac Corporation– Creates risk models used to generate a credit score.Creates risk models used to generate a credit score.– Different risk models are used for different types of Different risk models are used for different types of

financing.financing.

Key Factors of Your Credit ScoreKey Factors of Your Credit Score– A third of your score is determined by your positive A third of your score is determined by your positive

and/or negative credit history during the last 12 months.and/or negative credit history during the last 12 months.– Utilization Ratio Utilization Ratio (ratio of all revolving account balances to all revolving (ratio of all revolving account balances to all revolving

limits) limits) – – decreases scores if above 30%. [decreases scores if above 30%. [ex: $300 ex: $300 balance/$1000 limit=30%balance/$1000 limit=30%]]

– Inquiries. Rarely impacts score more than 10-15 points!Inquiries. Rarely impacts score more than 10-15 points!

Credit ScoringCredit Scoring


Credit Concepts


How to Improve Credit ScoresHow to Improve Credit Scores Credit RestorationCredit Restoration

– Derogatory items disputed and not verified within 30 days must be deleted from Derogatory items disputed and not verified within 30 days must be deleted from the credit report (Fair Credit Reporting Act). the credit report (Fair Credit Reporting Act).

– TypicallyTypically,, 4-6 4-6 months to removemonths to remove 40%-60%40%-60% of derogatoryof derogatory items and increase score items and increase score 40-100 points.40-100 points.

– Credit Restoration is NOT Credit Counseling.Credit Restoration is NOT Credit Counseling. Credit Counseling ruins your score. Credit Counseling ruins your score. Partial payments=late payments. Lenders view as Chapter 13 Partial payments=late payments. Lenders view as Chapter 13

Establish Positive CreditEstablish Positive Credit– Open new trade lines (Open new trade lines (Secured Credit Cards & Installment LoansSecured Credit Cards & Installment Loans))– Pay on time with existing accounts – Last 12 monthsPay on time with existing accounts – Last 12 months


Credit Concepts


Nowhere to Hide! Nowhere to Hide! – The Average American is in at least 50 Databases (The Average American is in at least 50 Databases (PC Magazine July ’04))

Types of Identity TheftTypes of Identity Theft– Department of Motor VehiclesDepartment of Motor Vehicles – – Obtaining a driver's license in your Obtaining a driver's license in your

name.name.

– Social SecuritySocial Security - - A person steals your SS # to gain employment.A person steals your SS # to gain employment.

– Medical InformationMedical Information – – Obtaining drugs or medical care in your name.Obtaining drugs or medical care in your name.

– Criminal IdentityCriminal Identity - - Someone impersonates you and commits a crime. Someone impersonates you and commits a crime.

– Financial IdentityFinancial Identity – – Someone opens new or uses your existing accounts. Someone opens new or uses your existing accounts.

Identity TheftIdentity Theft


Credit Concepts


Real Incidents. Real ThreatReal Incidents. Real ThreatMedical Identity Theft Nearly Ruined a Good Mother’s Life. CBS Medical Identity Theft Nearly Ruined a Good Mother’s Life. CBS News – 10/9/06.News – 10/9/06.What Happened: What Happened: A woman stole the driver’s ID of Anndorie Sachs, walked into a A woman stole the driver’s ID of Anndorie Sachs, walked into a

hospital, had a baby, and left.hospital, had a baby, and left.Victim Impacts:Victim Impacts: Authorities accused Sachs of being an unfit mother Authorities accused Sachs of being an unfit mother

and threatened to take away her children. No one believed Sachs until and threatened to take away her children. No one believed Sachs until she physically went and had her blood tested.she physically went and had her blood tested.

ID Theft Victim Battling Problems For A DecadeID Theft Victim Battling Problems For A Decade.. Eagle Tribune.Eagle Tribune. – – 3/21/07 3/21/07 Criminal Identity TheftCriminal Identity Theft

What Happened:What Happened: Darryl M. Landry used Daryl A. Landry’s identity to freely commit Darryl M. Landry used Daryl A. Landry’s identity to freely commit crimes. When abducting children, he had them call their parents, crimes. When abducting children, he had them call their parents, naming the innocent Daryl A. Landry as the culprit. naming the innocent Daryl A. Landry as the culprit.

Victim Impacts:Victim Impacts: The innocent Daryl has been fighting angry phone calls and arrest The innocent Daryl has been fighting angry phone calls and arrest warrants for nine long years.warrants for nine long years.

Cyberthieves Stole 1.3 Million Names from MonsterCyberthieves Stole 1.3 Million Names from Monster. . USA Today – USA Today – 8/24/07 8/24/07 Financial Identity TheftFinancial Identity Theft

What Happened: What Happened: Thieves organized a massive operation that stole 1.3 million Thieves organized a massive operation that stole 1.3 million customer names & emails from Monster; they sent out an email that customer names & emails from Monster; they sent out an email that when clicked, allowed the thief to highjack the computer.when clicked, allowed the thief to highjack the computer.

Victim Impacts: Victim Impacts: Many people have lost and will lose personal information to thieves Many people have lost and will lose personal information to thieves and will suffer identity theft.and will suffer identity theft.


Credit Concepts


Protect Your IdentityProtect Your Identity Practice Good Mailbox HabitsPractice Good Mailbox Habits

--Pick up immediately; use post office for outgoing mailPick up immediately; use post office for outgoing mail Shred or Burn Personal DocumentsShred or Burn Personal Documents Place a Fraud AlertPlace a Fraud Alert

--Provided for up to 7 years at NO COSTProvided for up to 7 years at NO COST Place a Security Freeze Place a Security Freeze

--$10 to place/$10 to lift; per bureau$10 to place/$10 to lift; per bureau Purchase Identity Theft Protection PlansPurchase Identity Theft Protection Plans

--Monitoring Services- Monitoring Services- Notification is sent to alert the consumer of a new accountNotification is sent to alert the consumer of a new account--Restoration Services- Restoration Services- Helping the consumer restore their credit and their nameHelping the consumer restore their credit and their name

Obtain Yearly Free Credit ReportObtain Yearly Free Credit Report ((www.annualcreditreport.com)www.annualcreditreport.com)


Credit Concepts


Employers, You May be at Employers, You May be at RiskRisk

The Problem:The Problem: Businesses hold customer & employee Businesses hold customer & employee personal info.personal info.

By merely maintaining records, By merely maintaining records, businesses are at risk for a DATA BREACHbusinesses are at risk for a DATA BREACH

The Law:The Law: Your business may not be in compliance with Your business may not be in compliance with Federal and State Laws regarding the prevention of a data Federal and State Laws regarding the prevention of a data breach.breach.

The Costs:The Costs: Your business may not be prepared to Your business may not be prepared to mitigate costs in the event of data loss: legal fees, fines, mitigate costs in the event of data loss: legal fees, fines, and judgments. and judgments.

……What can you do?What can you do?


Credit Concepts


The SolutionThe Solution

Comply with Federal and State LawsComply with Federal and State Laws

Draft a NPI/Data Breach Policy and regularly train employees Implement a documentation method in case a data breach occurs

Designate an internal privacy expert for your company

Draft a discipline protocol for employees, to establish precedence.

1.)1.) Gramm-Leach-Bliley Safeguard Gramm-Leach-Bliley Safeguard ActAct2.)2.) Fair and Accurate Credit Fair and Accurate Credit Transactions ActTransactions Act


Credit Concepts


Thank You For Your Time!Thank You For Your Time! Opt in FormOpt in Form

- Fill out top half of form to receive our newsletterFill out top half of form to receive our newsletter- Fill out bottom half if you’d like to meet about any of the Fill out bottom half if you’d like to meet about any of the

related topics.related topics. QUIZ ANSWERSQUIZ ANSWERS

1.1. (C.) 720 is a very good credit score. 970 is not possible(C.) 720 is a very good credit score. 970 is not possible

2.2. (B.) Collections remain on your report for 7 years after the date of last activity.(B.) Collections remain on your report for 7 years after the date of last activity.

3.3. (B.) A utilization ratio over 30% reduces your score.(B.) A utilization ratio over 30% reduces your score.

4.4. (C.) 30% of credit reports contain serious errors that result in the denial of credit.(C.) 30% of credit reports contain serious errors that result in the denial of credit.

5.5. (C) Computer hacking is the leading method of identity theft.(C) Computer hacking is the leading method of identity theft.

6.6. (A) (B) and (C). Only ID theft “by a family member” unless you file a police report.(A) (B) and (C). Only ID theft “by a family member” unless you file a police report.


Credit Concepts

Your Name – Credit ExpertYour Name – Credit ExpertYour Logo

Sample Presentation FormatSample Presentation Format

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Your Name – Credit ExpertYour Name – Credit ExpertYour Logo

Credit Concepts

Helping people improve and protect their creditSample Presentation FormatSample Presentation Format

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