CREDIT REPORTS and SCORING

CREDIT REPORTS and SCORING Your Credit Report A record of your payment history as reported by your credit grantors A profile of your borrowing, charging and repayment activities Collection of Data Credit reporting agencies collect data from your credit providers to assemble your personal computerized “Credit Snapshot”. HOW LONG? In most cases, Negative information may remain on your credit report for up to 7 Years. Civil judgments -7 years from the date filed HOW LONG? Tax Liens- 7 years from the date paid Chapter 13 Bankruptcies dismissed or discharged - 7 years Chapter 7 Bankruptcies - 10 yrs YOUR CREDIT REPORT Contains 4 types of information: - Identifying Information - Public Record Information - Credit Information - Inquiries IDENTIFYING INFORMATION Your Name (Jr., Sr., III) Nicknames (AKA) Current and Previous addresses Social Security Number Year of Birth Current and Previous Employers Your Spouse’s Name CREDIT INFORMATION Accounts you have -banks, retailers, credit card issuers, other lenders Types of accounts/loans -mortgage, student loan & revolving accounts Date you opened the accounts CREDIT INFORMATION Your Credit Limits Loan Amounts Co-signers Payment Pattern INQUIRIES? How often do you apply for credit? Do you give creditors permission to look at your credit file? INQUIRIES WILL REMAIN ON YOUR FILE FOR 2 YEARS. FREE CREDIT REPORTS A copy of your consumer credit report from any credit bureau can be obtained free of charge, IF you request it: 1. Within 60 days of being denied credit, insurance or employment , or had adverse action taken on an existing account due to information contained in your credit report. ADVERSE ACTION: You were charged higher rates and/or fees or deposits based on information in a credit report issued by a credit reporting agency. FREE CREDIT REPORTS You are entitled to a free report if you certify in writing: 2. You are unemployed and plan to look for a job within the next 60 days 3. You receive Public Assistance 4. Your report is inaccurate because of FRAUD **ARE YOU A VICTIM OF FRAUD? You can add a fraud alert to your consumer credit reports with 1 call: Fraud Victim Assistance Department 800-680-7289 FACT Act Fair and Accurate Credit Transaction Act of 2003 1 Free Credit Report per agency/year www.annualcreditreport.com or 1-877-322-8228 Credit Reporting Agencies Servicing the Texas Gulf Coast Area To receive your Consumer Credit Reports: annualcreditreport.com, or contact the agencies by phone or internet for instructions. CSC Credit Services, Inc. Fee: $ 9.50 Individual CSC Credit Services P.O. Box 981221 El Paso, TX 79998-1221 1-800-392-7816 www.csccredit.com Trans Union, LLC. Fee: $ 9.50 Individual Consumer Relations P.O. Box 1000 Chester, PA 19022 1-800-888-4213 www.transunion.com Experian Fee: $9.74 Individual Experian P.O. Box 2104 Allen, TX 75013-2104 1-866-200-6020 www.experian.com OPT-OUT To have your name and address removed from all mailing lists offered by the main consumer credit-reporting agencies: Call 888-5 OPTOUT (888-567-8688) Your Credit Score : BEACON® - Equifax EMPIRICA® - Trans Union FICO ® - EXPERIAN/ FAIR, ISAAC Risk Model Credit scores are based solely on information in consumer credit reports maintained at one of the credit reporting agencies. They evaluate the same information in your credit report that a lender looks at. What is a FICO ® score? A FICO ® score is a number that tells a lender how likely you are to repay a loan or make credit payments on time. What a FICO® Score Considers There are five main categories of information that FICO ® scores evaluate. 1. PAYMENT HISTORY What is your track record? 2. AMOUNTS OWED How much is too much? 3. LENGTH OF CREDIT HISTORY How established is yours? 4. NEW CREDIT Are you taking on more debt? 5. TYPES OF CREDIT USE Is it a "healthy" mix? #1 Payment History What is your track record? APPROXIMATELY 35% OF YOUR SCORE IS BASED ON THIS CATEGORY. The first thing any lender wants to know is whether you have paid past credit accounts on time. This is also one of the most important factors in a credit score. Your score takes into account: Payment information on many types of accountsCredit cards Retail accounts Installment loans Finance company accounts Mortgage loans. Your score takes into account: Public records and collection itemsReports of events such as bankruptcies, foreclosures, suits, wage attachments, liens and judgments. Your score takes into account: Details on late or missed payments ("delinquencies") -How late they were -How much was owed, -How recently they occurred and -How many there are. Your score takes into account: -How many open accounts have payments that are are current? -How many accounts show no late payments? #2. Amounts Owed How much is too much? APPROXIMATELY 30% OF YOUR SCORE IS BASED ON THIS CATEGORY. Part of the science of scoring is determining how much is too much for a given credit profile. Your score takes into account: -The amount owed on all accounts -Whether you are showing a balance on certain types of accounts -How many accounts have balances Your score takes into account: The amount of the total credit line that is being used on credit cards and other "revolving credit" accounts The amount of your installment loan accounts that are still owed, compared with the original loan amounts #3 Length of Credit History How established is yours? APPROXIMATELY 15% OF YOUR SCORE IS BASED ON THIS CATEGORY. In general, a longer credit history will increase your score. However, even people who have not been using credit long may get high scores, depending on how the rest of the credit report looks. #4 New Credit Are you taking on more debt? APPROXIMATELY 10% OF YOUR SCORE IS BASED ON THIS CATEGORY. Your score takes into account: - How many new accounts you have - How long it has been since you opened a new account - How many recent requests for credit you have made, as indicated by inquiries to the credit reporting agencies Your score takes into account: Length of time since credit report inquiries were made by creditors and lenders Whether you have a good recent credit history, following past payment problems #5 Types of Credit in Use Is it a "healthy" mix? APPROXIMATELY 10% OF YOUR SCORE IS BASED ON THIS CATEGORY. Your score takes into account: What type of credit accounts you have in addition to how many you have of each. It's important to note that raising your score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage credit responsibly over time. TO INCREASE YOUR CREDIT SCORE: - Keep balances low on credit cards and other revolving credit - Pay off debt rather than moving it around - Don't open a number of new credit cards that you don't need, just to increase your available credit. TO INCREASE YOUR CREDIT SCORE: If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. Do your rate shopping for a given loan within a focused period of time. Re-establish your credit history if you have had problems. **Pay your bills on time If you have missed payments, get current and stay current. Communicate with your creditors If you are having trouble making ends meet, contact your creditors. Please note that: A score takes into consideration all these categories of information, not just one or two. No one piece of information or factor alone will determine your score. The importance of any factor depends on the overall information in your credit report. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. It's impossible to say exactly how important any single factor is in determining your score. — Even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information Remember, this varies from person to person and for any one person over time. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score. If you have been denied credit, or did not get the rate or terms you requested, ask the creditor if a credit scoring system was used. If you get credit, ask the creditor if you are getting the best rate and terms available, and if not, why? ALTERNATIVE CREDIT: Utility Payments Rental History Insurance Child Care Any timely payment that is not reported to the Credit Reporting Agencies AVOID SURPRISES: KNOW and UNDERSTAND YOUR CREDIT REPORT! Before applying for your loan, dispute the inaccurate information in your credit reports- from each credit reporting agency. REVIEW YOUR CREDIT REPORTS EVERY YEAR YOU ARE ENTITILED TO 1 FREE REPORT per YEAR FROM EACH CONSUMER REPORTING AGENCY FREE CREDIT COUNSELING AND HOMEBUYER EDUCATION “FUNDAMENTALS OF GOOD CREDIT” CREDIT COALITION 713-224-8100 www.creditcoalition.org HUD Approved Housing Counseling Agency