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Understanding Credit Reports _ Scores

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					UNDERSTANDING
Your CREDIT REPORT
& SCORES

                   www.credit.org



       Promoting Financial Literacy
About Springboard

  Springboard is a non-profit organization
   founded in 1974.
  We offer personal financial education and
   assistance with money, credit, and debt
   management through educational
   programs and confidential counseling.
About Springboard

  Accredited by the Council on Accreditation (COA)
  Member of the National Foundation for Credit
   Counseling (NFCC)
  Certified by the Department of Housing and Urban
   Development (HUD)
  Member of the Better Business Bureau (BBB)
Our Services Include

       Credit and Debt Counseling
       Financial Education Programs – Seminars and
        Materials
       Debt Management Plans
       Homeowner Assistance (Foreclosure
        Prevention)
       First Time Home Buyer Education Seminars
       Reverse Mortgage Counseling
       Pre-Bankruptcy Budget and Credit Counseling
       Pre-Discharge Financial Management
        Instructional Course
Introduction
  It is well established that credit scores are now a
   cornerstone of the U.S. credit system.
  Credit scores determine access to housing, unsecured
   credit lines, insurance, utility and cell phone services, and
   employment.
  It is imperative that the underlying data be correct for the
   score to have any meaning and consumers to accept the
   validity of credit scoring.
                      POP Quiz
Based on a study by the Public Interest Research Group, how
   many credit reports contain errors ?

              a.  3 in 5
              b.  1 in 4
              c.  2 in 2


                 b. 1 in 4
Credit History is Your Financial DNA

According to study conducted by the Public
Interest Research Group PIRG “Mistakes Do
Happen:
  A Look at Errors in Consumer Credit
  Reports” www.pirg.org, in which it was found
  that one in four credit reports contains error
  serious enough to cause consumers to be
  denied credit, a loan, an apartment or home
  loan or even a job.
Credit History is Your Financial DNA

The importance of good credit
      More employers are reviewing credit reports of
       prospective employees
      Insurance companies review your credit report when
       you apply to insure you home and/or car.
      Without good credit, it is very difficult to obtain a credit
       card, which is helpful if an emergency arises.
      Many businesses prefer the use of credit cards.
      Many employment fields, such as financial services,
       gaming, military and law enforcement, continually
       monitor their employees’ credit reports.
Make sure you get credit when credit
is due
An estimated 50 million Americans have little or no credit history
and therefore can’t access mainstream credit. There are many
businesses such as child care, private mortgages, payday lenders,
gas, electric, water, telephone, utilities and cable TV that create
regular monthly payment flows that are not aggregated to a credit
history.
             Fair Isaac “Expansion Score” - Fair Isaac's FICO® Expansion® Score
              predicts credit risk for consumers without FICO® scores by bringing together
              data in real time from alternative credit data sources - www.myfico.com
             Payment Reporting Builds Credit (PRBC) - http://prbc.com/
             Rent Reporters - RentReporters is a service that verifies your monthly rent
              payments with your landlord and provides that data to the credit bureaus to
              be added to your credit report. www.rentreporters.com
             First American CREDCO's Anthem Score represents a comprehensive
              and reliable underwriting score for consumers. who have little or no credit
              history.
              Anthem Report and Anthem Score http://www.credco.com
Credit Reports
  What information is
  contained in my credit
  report?
       Identifying Information
       Public Record
       Credit Information
       Inquiries
Identifying Information
  Identifying Information:
      Your name
      Current and previous addresses
      Telephone number
      Social Security Number
      Date of birth
      as well as current and previous employers.



  This information is not used in the scoring, but to
   verify your information with the information on an
   application.
  Also the first place you may spot identity theft!
Public Records
  Public Record Information:
      Bankruptcy records, tax liens, monetary judgments,
       debts referred to collection agencies and, in some
       states, overdue child support is noted on the credit
       report.
      Bankruptcy Information can remain on a consumer’s
       credit report for up to 10 years.
      Unpaid tax liens can be reported indefinitely, and paid
       tax liens remain for seven years from the date paid.
      Other public record information can remain for up
       seven years.
Credit Information or Trades
  Credit Information:
      Specific information about each account, such as the
       date the account was opened,
      the credit limit or loan amount, the balance due,
       monthly payment, and payment history during the past
       several years.
      For open accounts, positive credit information remains
       on the report indefinitely.
      Information on closed accounts and negative payment
       notations remain up to seven years.
      The report also states whether a spouse or co-signer is
       responsible for paying the account.
Inquiries
  Inquiries: The credit report also lists the names of those who
   obtained information from the credit report for the past two
   years.
      “Hard” inquiries are those that result from an attempt to
       solicit credit or a loan.
      Other types of inquiries, such as those that result when a
       consumer requests a copy of his or her own report directly
       from the credit reporting agencies, are “soft” inquiries that
       are not viewed by prospective creditors but are recorded and
       remain on the report from one to two years.
              Employers, landlords, pre-approved not responded to are all
               soft inquires.
        Consumers should be aware that when they request copies
         of their credit reports from third party vendors, rather than
         directly from the credit reporting agency, the inquiry often
         looks like a request for credit.
                POP Quiz
Consumers should check their credit reports
 how often?



At least once every
      12 months
Your Credit Report


  You should review your credit reports at least
   once a year.
  You are entitled to one free report from each
   bureau every 12 months from:
          www.annualcreditreport.com
                  877-322-8228
Additional Free Credit Reports
  Anyone can request an additional free credit report
  for the following reasons:
       You have been denied credit, insurance, housing, or
        employment within the previous 60 days.
       You have been a victim of identity theft and have
        reason to believe that information is incorrect due to
        fraud.
       You are without employment and plan to apply for
        employment within the next 60 days.
       You are receiving public assistance.
  If a negative decision, in whole or in part, has been
   made in relation to the information that is in your
   credit report.
  If your credit report has been modified due to an
   investigation that you requested.
Credit Score – FICO or FAKO?


     What   is a credit score?
     Why are your three scores
      different?
     What affects your credit score?
Experian
  Unfortunately, as of early 2009 Experian has stopped
   allowing consumers to access their FICO score.
  Only lenders may purchase a consumers Experian
   FICO score. This leaves consumers unable to know
   in advance what that score is in order to take steps to
   improve it before seeking credit.
  Consumers may still access their TransUnion and
   Equifax FICO scores directly by visiting
   www.myfico.com.
  Once your lender has obtained your FICO scores
   from the credit bureaus, you are entitled to request a
   copy from your lender, including your Experian score.
           True or False
 Missing just one or two credit card
payments won’t hurt your credit rating.



               False
Missing a payment is noted on your credit
report. Negative information such as this
can legally remain on your credit report for
up to 7 years.
What Affects Your FICO Score?
 Inquiries for Rate Shopping
The score allows for “rate shopping.”
Looking for a mortgage, auto or student loan may cause multiple lenders to request
your credit report, even though you're only looking for one loan. To compensate for this,
the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring.
So, if you find a loan within 30 days, the inquiries won't affect your score while
you're rate shopping.

In addition, the score looks on your credit report for auto or mortgage inquiries older
than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping
period as just one inquiry when determining your score.

For FICO scores calculated from older versions of the scoring formula, this shopping
period is any 14 day span.

For FICO scores calculated from the newest versions of the scoring formula, this
shopping period is any 45 day span. Each lender chooses which version of the FICO
scoring formula it wants the credit reporting agency to use to calculate your FICO
score.
Simple Ways to Improve Your Credit
Score
  Review credit reports regularly - Dispute any
     inaccuracies
    Make your payments on time/pay off unpaid
     debts -collections
    Keep balances below 50% of line of credit or
     less (Lenders prefer 25% or less)
    Keep old credit active – use the card at least
     once or twice a year to keep active
    Demonstrate a good mixture of credit history:
     Revolving, installment, mortgage
    Limit inquiries
Credit Consumers Should Know Their
Rights
    Fair Credit Reporting Act FCRA – Purpose is to
     promote accuracy and fairness, and to ensure the
     privacy of information in your credit reports along with
     dispute rights.
    Fair Debt Collections Practices Act FDCPA –
     Purpose is to prevent abusive, deceptive and unfair debt
     collection practices by debt collectors.
    Fair and Accurate Credit Transactions Act FACTA –
     Amendment to the FCRA, intended to primarily help
     consumers fight the growing crime of identity theft,
     accuracy, privacy, limits on information sharing, and new
     consumer rights to disclosure and free credit reports.
Disputing Errors


  What can you dispute?
     Anything that is not yours (reported to the
      wrong credit report or id theft)
     Anything that is reported inaccurately
     Anything that is past the statute of limitations
      for reporting
              True or False
Paid tax liens stay on the credit report for 7
      years from the date it was paid.



                   True
  Under the Fair Credit Reporting Act
  A paid tax lien will legally remain on your
  credit report for 7 years from date paid.
Statute on Limitations for Reporting
Typical retention periods (may vary by state):

         Chapter 7, 11 or 12 bankruptcies 10 years from the date filed

         Chapter 13 bankruptcy filings 7 years from date paid

         Chapter 13 bankruptcy that is not completed 10 years

         Bankruptcies voluntarily dismissed 7 years

         Civil judgments 7 years from the date filed

         Unpaid tax liens Indefinite

         Paid tax liens 7 years from date paid

         Collections paid or unpaid 7 years from date of the initial missed payment

         Charge off accounts 7 years from date of the initial missed payment

         Credit accounts 7 years from the date of initial missed payment

         Inquiries 2 years
Basics of sending dispute letters
1.  Provide a copy of your photo id, social security card, and proof
   of address (such as a utility bill, pay stub or bank statement)

2.  Provide copies of any documentation supporting your dispute

3.  Keep originals send copies

4.  Send all letters certified mail or return receipt

5.  Keep a separate file for each of the credit reporting agencies

6.  Respond quickly

7.  Know your rights!
     Opting Out
    You can remove your name from any list compiled
     by a credit reporting agency, whether the list is for
     pre-approved credit offers or direct marketing.
    To "opt-out," that is, to remove your name from
     mailing lists compiled by credit bureaus.
    Call the toll-free number all credit reporting
     agencies are required by law to maintain for this
     purpose:
    Opt out of pre-screened or pre-approved credit
     offers @ 1-888-5OPT-OUT or 1-888-567-8688.
    They can stop the selling of your personal
     information to creditors.
Resources

  www.credit.org - Springboard’s Consumer Guide to Good Credit


  www.whatsmyscore.org - Visa’s educational interactive tutorial
   that explains credit, credit scores and how to build solid credit

  www.myfico.com - Fair Isaac’s Educational website


  www.ftc.gov – your rights, educational materials or to file a
   complaint
Post-Test and Evaluation


  Please take a moment to complete your post-
   test.
  Your comments and feedback are greatly
   appreciated!
Thank You!


  Springboard Nonprofit Consumer
        Credit Management
          800-WISE-PLAN
          www.credit.org




                    4351 Latham St. Riverside CA. 92501 www.credit.org

				
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