PowerPoint Presentation - Understanding Your Credit

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					Understanding Your
      Credit
Purdue Employees Federal Credit
            Union
                    The Basics
   What is a credit report?
    Information about:
     Last known and previous address

     Last known employer

     Monthly debts

     Loan repayment history

     Credit balances vs. available limits
                       The Basics
   What is a credit bureau?
       Company that stores your credit information
       Also known as Credit Reporting Agencies
        (CRA’s)
       Three national reporting agencies:
            TransUnion
            Equifax
            Experian (formerly TRW)
                     The Basics
   Credit reports can be different depending on
    which agency it is being pulled from and for
    what purpose
       Applying for an auto loan
       Employment
       Mortgage
       Credit Card
             The FACT Act

  Stands for Fair and Accurate Credit and
          Transactions (FACT) Act

The FACT Act was signed into law December
                   2003
                     The FACT Act
   Provide better consumer credit protection
       Free copy of credit report every 12 months from
        each of the CRA’s – www.annualcreditreport.com
       Ensure credit histories are accurate
       Create a national system of fraud detection
            Red flag indicators
            Fraud alerts
            ID theft procedures
       Establish communication between the 3 CRA’s
           Your Credit Report
   Your credit report is divided into 6 (six) main
    sections:
       Consumer Information (address, birthday and
        employment)
       Consumer Statement
       Account Histories
       Public Records
       Inquiries
       Creditor Contacts
               Your Credit Score
   What is a credit score?
       A complex statistical model developed from
        thousands of consumer files
   Why was the credit score created?
       Credit scores came into wide use in the 1980’s
       Used to eliminate judgment decisions
       Create consistency and equality
                Your Credit Score
   How is my score calculated?
       Payment history
       Outstanding debt
       Credit account history
       Recent Inquiries
       Types of Credit


    Scores may be different from report to report
    depending on the type of scoring model being used.
            Your Credit Score

   What factors don’t affect my credit score?
     Debt ratio
     Income

     Length of residence

     Length of employment
     How To Improve Your Score
   Pay your bills on time
   Keep credit card balances low (under 35%)
   Apply for and open new credit only as needed
   Pay off debt instead of moving it around
   Avoid excessive inquiries
   Give yourself time
       Create A Positive History
   Print clearly an all credit applications
   Consistently use your complete name
   Pay your bills on time
   Set up a budget
   Review your credit report 60 to 90 days before
    making a major purchase (home or car)
               Falling Behind?
   Contact your lenders immediately

   Stop using your credit limits until your
    finances are under control

   Look to professionals for help
         Credit Misconceptions
   Your score will drop if you check your credit
   Closing old accounts will improve your credit
    score
   Once you pay off a negative record, it is
    removed from your credit report
   Being a co-signer doesn’t make you
    responsible for the account
   Paying off debt will add 50 points to your
    score
Possible Warning Signs Of Fraud
   Strange data
   Maxed-out credit cards
   Late payments
   Mistaken identity
   Credit score differences
             Emergency Contacts
   Your financial institutions
   The credit reporting agencies
       TransUnion (800) 680-7289
       Equifax (800) 525-6285
       Experian (888) 397-3742
   The Federal Trade Commission
       www.consumer.gov/idtheft
   The police
Questions?

				
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