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					Your Credit Report




        Understanding the
                   puzzle
           The basics:
      What is a credit report?
   Your credit payment history is
    recorded in a file or report.
   These files or reports are maintained
    and sold by "consumer reporting
    agencies" (CRAs).
   A credit bureau agency is a CRA.
How do you know if you have
      a credit report?
You have a credit record on file at a credit
  bureau if you have ever:
 applied for a credit or charge account
 applied for a personal loan
 applied for insurance
 applied for a job
    What is in a credit report?

   Your credit record contains
    information about your debts, and
    credit payment history.
   It also indicates whether you have
    any financial judgments, or have
    filed for bankruptcy.
                The Big 3

   There are three major credit
    bureaus: Equifax, Experian (formerly
    TRW), and TransUnion.
   Credit Bureau of Baton Rouge is
    affiliated with Equifax.
                The Big 3

   They compete with each other
   They do not share information
     contents of each may be different.
     when reviewing, get copies of all
      three.
   Inside a credit report…


While the formats are different, all of the credit
bureaus list the same types of items:
    1. Identifying information
    2. Accounts or “trade lines”
    3. Public records
    4. Inquiries
    5. Additional Information
      Identifying Information

   This information generally comes from credit
    applications that you have previously submitted
    to creditors
   This information is not used in your credit score:
      name, address, social security number, age,
       race, color, religion, national origin, sex or
       marital status, employment info, rental
       agreements, items reported as child support.
    Accounts or “Trade lines”

   Lenders report which accounts & what type
    of account you have with them:
     Bank   card, auto loan, mortgage, etc.
   When it was opened
   Date of last activity
   Balance & account limit
   Payment history
     Charge   offs and past dues will be located here
             Public Records

   Credit reporting agencies also collect
    public record information from state and
    parish courts, and information on overdue
    debts from collection agencies:
     Bankruptcies
     Judgments
     Tax   liens
                    Inquiries

   The inquiries section contains a list of everyone
    who accessed your credit report within the last
    two years:
       For applications for credit by you
       For periodic monitoring/review by companies where
        you already have accounts
       For “pre-approval” offers from companies
       For employment purposes
                   Inquiries

   Two types
       External
       Internal

    Internal inquiries do not appear on a lender’s
      copy of a credit report and do not affect
      the credit score.
      Additional Information

   Credit bureaus may also report information
    such as:
     Previousaddress
     Warning notifications
     Consumer statements
    Who can view my report?

   Anyone with what is considered a
    permissible purpose can look at your
    report. These companies, groups, and
    individuals can include:
     Potentiallenders
     Landlords
     Insurance companies
     Employers and potential employers
      What is a credit score?

   A score is a snapshot of your credit risk at
    a particular point in time.
   A credit score is a number lenders use to
    help them decide: “If I give this person a
    loan or credit card, how likely is it that I will
    get paid back on time?”
     What is a credit score?
   Credit bureau scores are often called
    “FICO scores”
   FICO scores determine a person’s risk
     The   higher the score the lower the risk
   Each lender has its own strategy for
    determining an acceptable risk
What makes up a credit score?

There are five main categories of information
  that FICO scores evaluate:

   Payment history (35 percent):
     bankruptcies,late payments, past due
      accounts and wage attachments
    What is your track record?
What makes up a credit score?

Payment History

 Tips for Raising your Score
      Pay your bills on time.
     If you have missed payments, get current and
      stay current.
     Paying off a collection account, or closing an
      account on which you previously missed a
      payment will not remove it from your credit
      report.
    What makes up a credit score?

   Amount of credit owing (30 percent):
    Your score takes into account:
        Whether you are showing a balance on certain types
         of accounts.
        How many accounts have balances.
        How much of the total credit line is being used on
         credit cards and other “revolving credit” accounts.
        Amount owed on all accounts, and on different types
         of accounts.


    How much is too much?
What makes up a credit score?

Amount of Credit Owing

 Tips for Raising your Score

      Keep balances low on credit cards and other
      “revolving” credit.
     Pay off debt rather than moving it around.
     Don’t close unused credit cards as a short-
      term strategy to raise your score.
What makes up a credit score?

   Length of Credit History (15 percent)

        Time since accounts were opened
        Time since last account activity




    How established is yours?
What makes up a credit score?

   Length of Credit History

    Tips for Raising your Score

     Ifyou’ve been managing credit for a short
      time, don’t open a lot of new accounts too
      rapidly.
What makes up a credit score?

   Search for and acquisition of new credit (10
    percent):

       number of recent credit inquiries
       number of recently opened accounts




    Are you taking on more debt?
What makes up a credit score?

   New Credit

    Tips for Raising your Score

       Do  rate shopping for an auto or mortgage loan
        within a focused period of time.
       Re-establish your credit history if you have had
        problems.
What makes up a credit score?

   Types of credit in use (10 percent)

        Type and number of various types of accounts
        (credit cards, retail accounts, mortgage)




       Is it a “healthy” mix?
What makes up a credit score?

   Types of credit in use

    Tips for Raising your Score

        Apply for and open new credit accounts only
         as needed.
        Have credit cards – but manage them
         responsibly.
        Note that closing an account doesn’t make it
         go away.
What makes up a credit score?

             Type of
             Credit in
     New       Use          Payment
    Credit     10%           History
     10%                      35%


Length of
 Credit
 History                 Amounts
  15%                     Owed
                           30%
    How the FICO score counts
            inquiries
 Inquiries don’t affect scores that much.
 Many kinds of inquiries aren’t counted
  at all.
 The score looks for “rate shopping”.
    4 Primary Threats to your
          Credit Score
 Late Payments
 High Credit Card Balances
 Debt Settlement
 No Credit Score


 These are all areas YOU can control!
What if I am turned down
        for credit?
   The Equal Credit Opportunity Act
    (ECOA) gives you the right to obtain
    the reasons why from the lender
    within 30 days.

   You are also entitled to a free copy of
    your credit report within 60 days.
    Review Your Credit File

   Review your credit report from each
    credit reporting agency at least once
    a year especially before making a
    large purchase:
      house
      car
    FREE Copy of your Credit
           Report

 From all three major credit reporting
  agencies
 Request by phone at 877-322-8228
 Or, go online
  (www.annualcreditreport.com)
 Available once every 12 months
  Info on the Three Credit
    Reporting Agencies
To request a copy, contact the credit
  reporting agencies directly:
 Equifax: (800) 685-1111,
  www.equifax.com
 Experian (formerly TRW):
  (888) 397-3742 www.experian.com
 TransUnion: (800) 888-4213,
  www.transunion.com
   Top 5 Credit FAQs: #5
“Should I subscribe to one of those $99
credit report monitoring services?”

You shouldn’t pay more than $10 for a
copy of your personal credit report.
Depending on where you live and your
credit history, you may be able to get
one free.
   Top 5 Credit FAQs: #4
“If my account is with a collection
agency, should I try to negotiate with
them or with the lender?”

Since the account has been passed on
to the collection agency BY the lender, it
would be better to work with the
collection agency.
   Top 5 Credit FAQs: #3
“What is the Statute of Limitations on
certain types of negative information
that may be in my file?”

Judgment – Remains on file 7 years
     from the date filed.
Lien – Remains on file indefinitely if
     unpaid.
       Top 5 Credit FAQs: #3

   Bankruptcy –
       Ch. 7 – Remains on file for 10 years
    from the date filed.

       Ch. 11 – Remains on file for 10
       years from the date filed.

        Ch. 13 – Remains on file for 7 years
    if dismissed or discharged.
       Top 5 Credit FAQs: #3

   Bankruptcy
      Ch. 13 – Remains on file for 10
      years if no disposition.
   Top 5 Credit FAQs: #2
“How can I get lenders to remove
charge offs from my report?”

Charge off accounts remain on your
report for 7 years. However, negotiating
with the lender on paying the item in full
is better than showing the item
completely unpaid.
       Top 5 Credit FAQs: #1
“Will consumer credit counseling services
help me get out of debt?”

They will negotiate with your creditors to
arrange a repayment schedule and may be
able to lower the interest rate on your credit
cards. Using a credit counseling service can
affect your credit rating because your
creditors will note that your bills are not being
paid according to the original credit terms.
          Tips to Know

 Put an entry “in dispute” through the
  CRA – lender has 30 days to
  respond.
 “Opt out” of pre-screened offers –
  go to www.optoutprescreen.com or
  call 888-567-8688.
 Put a “Fraud Alert” on your file for
  90 days by calling any one of the 3
  CRAs.
            Tips to Know

   Put a “Security Freeze” by calling
    each of the 3 CRAs. A freeze
    prohibits a CRA from releasing
    credit report without your
    authorization. $10 fee per CRA
    (a La. Law)
Questions?


 Thank you.

				
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