The World of Credit Reports

The World of Credit Reports Presented By The Credit-Wise Cats The World Of Credit Reports Today we’ll talk about:      What are credit reports and credit scores Information they contain Tips on guarding your credit Your rights with respect to Credit Reports How to correct mistakes What are credit reports  Credit Reports are A financial report card  They are prepared by three independent Credit Rating Agencies (CRAs):    Equifax, Experian, and Transunion  In general, they contain information about your past consuming, borrowing and payment habits What are credit reports  Credit Reports are given, with your express written consent, to:  Banks and other creditors  Insurance companies  Landlords and other lessors  Utility companies  Potential employers  Graduate school admission offices What are credit reports  Contact and other limited information on credit reports is given without your explicit consent to:  Financial companies wanting to make you a firm offer of credit  Insurance companies wanting to offer you a policy  Potential employers who want to hire you  Other companies whose products may “interest” you Information they contain 1. 2. 3. 4. 5. 6. 7. Personal information A credit summary Public Records Credit Inquiries Detailed Account History Clarifying notes Your Credit Score (sold separately) Information they DON’T contain 1. 2. 3. 4. 5. 6. Balance on checking or savings accounts Bankruptcies that are more than 10 years old Charged-off or debts placed for collection that are more than seven years old Gender, ethnicity, religion, political affiliation, Medical history Criminal records Information they contain 1. Personal information         Legal name Aliases Date of Birth Current and past addresses Current and past employers Phone and driver’s license number Social Security Number (typically masked) Miscellaneous * Sample taken from Privacyguard.com Guarding You Credit Check carefully the accuracy of all information.  Fix any mistakes immediately.  Something as innocent as an incorrect address could be a potential sign of identity theft, as criminals often redirect your mail and billing addresses to false places.  Information they contain 2. Credit Summary  Number of accounts by type  Real Estate, Revolving, Installment, Sent to Collection, Public Records  Their outstanding balance  Status (Current, Delinquent, Other)  Number of hard inquiries in the past six months * Sample taken from Privacyguard.com Guarding You Credit  Watch the number of credit cards in your wallet  Having 2 or 3 is a good idea to build credit  Having too many credit cards is not.  Remember that gas cards or retail store cards are also considered credit cards, just like a Visa or MC.  Having a credit card and not using it doesn’t help building a good credit score.  If you are thinking about canceling some credit cards, keep the ones with the most seniority. Information they contain 3. Public Records      Federal district bankruptcy records State and County court records Tax liens Monetary judgements Overdue child support (in some states) * Sample taken from Privacyguard.com Guarding You Credit Nothing on your public record is good news  Avoid bankruptcy proceedings at all cost.   Bankruptcy stays in your record for 10 years  Other negative factors can stay on your record for up to seven years Information they contain 4. Credit Inquiries  Those obtained with your written consent (Hard)     Name and contact information of the company who submitted the inquiry Date of the inquiry Date when the inquiry will be deleted from you report (They remain in your record for 2 years) These inquiries are visible to everyone accessing you credit report Information on who requested it These are only visible to you  Without your explicit consent (Soft)   * Sample taken from Privacyguard.com Guarding You Credit Too many hard credit inquiries can harm your credit (they are kept for 2 years)  Do not approve credit inquiries lightly  Make sure no one is accessing your credit without your permission  Soft inquiries do not affect your credit, but review them carefully  When you access your credit history, that doesn’t affect your credit adversely  Information they contain 5. Detailed Account History        Creditor Name Account Number (Masked) Date opened Credit Limit Maximum and current balance Payment Status Frequency and length of any late payments * Sample taken from Privacyguard.com Guarding You Credit  Watch your payment habits:  Never be late on a payment!  If late, don’t be too late: 90 days late is worse that 60 days; 60 days is worse than 30 days.  Always try to make larger payments than the minimum, but never miss making at least the minimum payment.  If possible, try paying the full balance of your credit card each month; It saves you money and frees your credit balances.  Don’t move balances from card to card, pay them. Guarding You Credit  Watch your credit limit much is ideal? – It depends on your annual income and credit history.  The limit on any open line of credit is considered by loan executives as good as money in you pocket, whether you use it or not.  Try to never exceed more than 50% of your limit.  Keep the line of credit as free as possible for emergencies.  How Guarding You Credit Watch out for any clerical mistakes your creditor may make when processing your payments  Watch out for identity theft   Investigate any unfamiliar accounts  Look at history of charges  When information in your report has an adverse effect on your record, it is explicitly outlined Information they contain 6. Personal Statements  Should you chose to add a clarifying note to your credit report, it would be visible to everyone accessing it. This note can say anything you want, but has a word limit. It is often used to smooth any adverse information on your report. Be careful with overkill.    Information they contain 7. Your Credit Score       A number between 300 and 850 that assesses you credit risk It is calculated using FICO’s method, using information on your credit report It is used to determine how your credit risk compares to that of others The higher the number the better It’s not a standard element of your credit report Often accompanied by an explanation of what the score means and how you can improve it * Sample taken from Privacyguard.com The Fair Credit Reporting Act  Your rights under the FCRA      You must be notified when information has been used against you If that is the case, you have the right to a free copy of your credit report within 60 days You can dispute any inaccuracies and receive an expect action within 30 days Incorrect information must be fixed or deleted Creditors must disclose any disputed with them to the CRA The Fair Credit Reporting Act  Your rights under the FCRA (Continued)     Negative outdated information should not be reported Access to your file is limited You may ask to be removed from CRA lists to avoid unsolicited offers for credit and insurance You may seek compensation for damages from violators How to correct mistakes 1. Write a letter to the CRA  provide copies of all supporting documents, including the credit report itself. 2. 3. Await for a acknowledgement letter Follow up if problems are not corrected   Telephone follow up is highly recommended for this Sometimes, it’s necessary to write to some or all of the creditors directly 4. Be Patient, but don’t procrastinate CRAs’ Contact Information Equifax Information Services, LLC. PO Box 740243 Atlanta, GA 30374 www.equifax.com Experian Information Services, LLC. P.O. Box 2002 Allen, Texas 75013-3742 www.experian.com Trans Union Information Services, LLC. P.O. Box 1000 Chester, PA 19022 www.transunion.com Questions?