Your Credit Report

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Your Credit Report
Understanding the puzzle
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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.

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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

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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.

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The Big 3

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

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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.

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Inside a credit report

• While the formats are different, all of the
  credit bureaus list the same types of items
• Identifying information
• Accounts or trade lines
• Public records
• Inquiries
• Additional Information

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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.

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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

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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

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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

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Inquiries

• Two types
• External
• Internal
• Internal inquiries do not appear on a lenders
  copy of a credit report and do not affect the
  credit score.

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Additional Information

• Credit bureaus may also report information such
  as
• Previous address
• Warning notifications
• Consumer statements

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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
• Potential lenders
• Landlords
• Insurance companies
• Employers and potential employers

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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?

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What is a credit score?

• Credit bureau scores are often called FICO
  scores
• FICO scores determine a persons risk
• The higher the score the lower the risk
• Each lender has its own strategy for determining
  an acceptable risk

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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?

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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.

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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?

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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.
• Dont close unused credit cards as a short-term
  strategy to raise your score.

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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?

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What makes up a credit score?

• Length of Credit History
• Tips for Raising your Score
• If youve been managing credit for a short time,
  dont open a lot of new accounts too rapidly.

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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?

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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.

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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?

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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 doesnt make it go
  away.

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What makes up a credit score?
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How the FICO score counts inquiries

• Inquiries dont affect scores that much.
• Many kinds of inquiries arent counted at all.
• The score looks for rate shopping.

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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!

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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.

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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

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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

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Info on the Three Credit Reporting Agencies

• To request a copy, contact the credit reporting
  agencies directly
• Equifax [phone], www.equifax.com
• Experian (formerly TRW) [phone]
  www.experian.com
• TransUnion [phone], www.transunion.com

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Top 5 Credit FAQs 5

• Should I subscribe to one of those 99 credit
  report monitoring services?
• You shouldnt 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.

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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.

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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.

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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.

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Top 5 Credit FAQs 3

• Bankruptcy
• Ch. 13 Remains on file for 10 years if no
  disposition.

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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.

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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.

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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.

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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)

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Questions?

• Thank you.