Understanding Credit
Reports & Credit Scores
Presented by
Rich Call
Consumer Credit Counseling
Service
What We Will Cover
Credit Reports and Credit
Scores - What they are and how
they are developed.
Understanding the Reports –
How to read them and why they are
important.
Acting On the Information In
Them – What to do to maintain,
correct, or improve the information.
What is a credit report?
Detailed record of your history of borrowing
money and paying it back
Report card about your credit standing
Used by lenders, insurance companies,
landlords, and employers to determine
whether you have good financial habits
Credit reports are provided by credit bureaus
based upon information provided to them by
creditors on a voluntary basis
3 Major
Credit Reporting Companies
Equifax – www.equifax.com 800-685-1111
Transunion – www.transunion.com 800-888-4213
Experian– www.experian.com 888-397-3742
$12.00/$15.00 if through them for single report from
one company
Can also purchase trimerge reports that combine info
from all three onto one report. Price is higher.
Free Credit Reports
New law : one free copy of credit report
from each of three credit bureaus every
year.
www.annualcreditreport.com
1-877-322-8228
Annual Credit Report Request Service
P O Box 105281, Atlanta, GA 30348-
5281
Credit score does not come automatically
with the free report.
Information on a Report
Identification & employment info
Account information & payment history
Collection accounts
Public record
Inquiries from creditors/potential
employers
CREDIT BUREAU REPORT
-----------------------------------------------
IDENTIFYING INFORMATION
Public, Joe 15 Any Street 325 Broad St. Someplace, USA 55555
Sam’s plumbing Welder Nice City, America 33333 03/15/52 222-22-2222
------------------------------------------------------------------------------------------------------------
Trade Line information
Industry Date opened Acct. Number High credit Balance Current rating Historical delinquency
Bankcard 05/03/92 xxxx1234 $5000 Current 90– 5 yr ago
Auto loan 05/03/01 xxxx3456 $15,000 $9750 Current
Retail 04/24/00 xxxx5678 $2500 $1200 30 days
Retail 04/05/02 xxx452 $800 $700 Current
Mortgage 06/05/99 xxx6789 $125,000 $115,000 Current
------------------------------------------------------------------------------------------------------------
Credit Inquiries
Date Industry Date Industry Date Industry
12/04 Bank 5/04 Auto finance 01/04 Retail
------------------------------------------------------------------------------------------------------------
Public Record / Collection Items
7/03 collection $450 8/04 judgment $1500 Paid 12/0402/05 collection $250
Disputing Information
Fair Credit Reporting Act
The Dispute Process
Put it in writing – to CRA and creditor in
question
CRAs must investigate – within 30 days
Must delete what they can’t verify
Must correct inaccuracies
Must report back to you
Accurate Negative Information
Negative account information will be
reported for 7 years.
Bankruptcy info – 7-10 years.
Defaulted student loans, judgments
on loans, and lawsuits can be listed
longer per individual state statute
Credit Scores
A number developed from a calculation using
the info from your credit report.
Most widely used is the Fico Score
Scores range from 300-850.
New Score being introduced called Vantage
Score
Scores range from 501 - 990
The higher the score, the better risk you are
determined to be and the better rate you will
be eligible for.
Five Ingredients of a
FICO Score
Credit Score Ingredients
types of
credit
10% payment
new credit
10% history
35%
amounts
ow ed length of
30% credit history
15%
Nationwide Range of FICO scores
Why is your Credit Score so important?
It is used by lenders to determine financial
responsibility
A bad score indicates that you are more at
risk - Could lead to:
Higher fees and rates
Being declined for new accounts
No credit line increases
Being rejected for jobs, apartments, or
insurance
Sample loan with credit scores
How a good FICO
score can save you
money:
$279 monthly
payment
$10,000 used car
$239 monthly
loan for 48 months
payment
Can result in an
extra $1920 in
FICO score FICO score
payments over the
below 590 720+
4 years
Interest rate of 14.9% Interest rate of 6.9%
Improving Your Score
Pay bills on time
Reduce debt
Keep balances low / credit limits
Apply for & open new lines only
when you need them.
Check your credit report for
accuracy and clear errors as soon
as possible.
Putting Your Credit Report to
Work For You
It can be a tool to assess and improve credit-
worthiness
Acts like a report card
Helps you create a goal-focused plan:
Correct incorrect info
Start paying bills on time
Reducing debt
Preparation for a meeting with a lender
Your goal? Successful credit application at
lowest cost to you possible.
More Information
CCCS
1-800-355-2227
www.cccservices.com
Federal Trade Commission
www.ftc.gov
Consumer website for credit scores
www.myfico.com
Recommended Reading
Your Credit Score – Liz Pulliam Weston
Dirty Little Secrets: What the Credit Bureaus Won’t Tell You
– Entrepreneur Press & Jason Rich