Understanding credit reports and your credit score is Part 5 of the 6-part Money Matters series created by the Athens-Clarke County Library. Money Matters is part of Smart investing @ your library, and is brought to you by a joint grant from the American Library Association and FINRA, the Financial Regulatory Authority Foundation.
1. MONEY MATTERS Class 5Presented by: Susan Huff
2. Credit ReportA summary of your financial history.
3. Credit ReportEach credit report list: Credit accounts, including credit cards, auto loans, student loans, and mortgages Creditor and account number Balance Date opened Payment history Current status, such as OK, Closed by customer, 30 days late payment, etc.
4. Inquiries: recent applications for new credit Collections: when a collection agency is seeking you to repay a debt Public Records: court judgments such as a bankruptcy, foreclosure, or tax lien
5. Credit Report Credit Reporting Agencies: Experian Trans Union Equifax Credit reporting agencies track how well you repay your loans.
6. Sample Credit Report
7. How long doesnegative informationremain on creditreports?
8. Creditor inquiries 1 to 2 years Employer inquires 2 years Delinquencies 7 years Collection 7 years Garnishment 7 years Repossessions 7 years Court Orders - 7 Years Eviction for non-payment 7 years Missed Child Support 7 years Foreclosures 7 years
9. Chapter 13 Bankruptcy 7 Years from the date filed. Chapter 7,11 & 12 Bankruptcy 10 years from the date filed. Tax Liens 7 years from the date paid or indefinitely if not paid
10. How long does positiveinformation stay on mycredit report? Active positive information can remain indefinitely. If an account is closed that has been positive, then it will remain on your report for 10 years after the date of last activity.
11. CREDIT SCOREA number that summarizes your credit risk based on your credit report, at a particular point in time. Determines who qualifies for credit, at what interest rate and what credit limits. statistical analysis of a persons credit report fast, fair, objective estimate of your credit risk very predictive of risk increased the availability of credit reduced the cost of providing credit
12. Who can access mycredit score? The Fair Credit Reporting Act (FCRA) restricts who can access your credit report Business have a right to check your credit report before they agree to do business with you.
13. Traditional uses ofCredit Score Lending Institutions Banks Credit Unions Finance Companies Credit Card issuers Auto Dealers Employers
14. Non-Traditional usesof Credit Score Auto Insurance Homeowners Insurance Utility Companies Landlords State and local child support enforcement agencies
15. FICO (Fair Isaac Corporation) 90% of lenders 300 850, higher is better Most credit scores fall between 600 to 750 NextGen Score CE Score Vantage Score 501 990 Assigns letter grade (A to F) to specific score ranges.
16. What is a good score? Based on FICO 300-850 750 or above Excellent 700 Good 650 Fair 600 Poor Below 600 high risk
17. CREDIT SCOREFACTORS
18. FICO High Achievers 93% have missed no payments Oldest account was opened 19 years ago Average age of accounts is 6-12 years Ratio of revolving balances to credit limits 7% Carry a balance of $1200 or less on non- mortgage accounts Virtually no FICO High Achievers have a public record or a collection listed on their credit report.
19. Improving Your CreditScore Correct mistakes / dispute errors on your report. Pay your bills on time. Focus on the negative factors provided with your FICO score Reduce balances on credit cards Pay off Debt rather than moving it around Dont close unused credit card accounts
20. The higher your FICO credit score, the lower your payments! Interest rates accurate as of February 5, 2010: 30 Yr fixed mortgage $200,000 GEORGIA FICO score APR Monthly payment 760-850 4.646% $1,031 700-759 4.868% $1,058 680-699 5.045% $1,079 660-679 5.259% $1,106 640-659 5.689% $1,159 620-639 6.236% $1,230
21. The higher your FICO credit score, the lower your payments! Interest rates accurate as of February 5, 2010: 48 month auto loan $25,000 GEORGIA FICO score APR Monthly payment 720-850 5.747% $584 690-719 7.490% $604 660-689 9.577% $629 620-659 13.046% $671 590-619 17.794% $732 500-589 18.477% $741
23. Free Credit Report Once a year, from each credit reporting agency You may be eligible for an additional free report if: You applied for a loan and were turned down. (within 30 days of your rejection) You are unemployed and plan to seek employment in the next 60 days You receive public welfare assistance You have reason to believe your credit file is inaccurate due to fraud. The State of Georgia offers 1 additional free request per year from each agency.
24. THE REALFree Credit Report www.annualcreditreport.com
25. The site should look like this: Pick your State then Request Report
26. Next youll beasked for somepersonalinformation suchas your name,date of birth,address andsocial security.
27. Select the credit bureaus you want to receiveyour free credit report from.
28. You will then be transferred to the credit reportingwebsite. Be aware that if this menu bar ever goesaway, you may have been taken to the wrong site.
29. You may be offered additional products for a fee. Dont check these if you only want your free credit report!
31. Click: Yes, I want to return to annualCreditReport.comand you will be taken to the website of the nextcredit reporting company you requested.
32. Credit Score myfico.com Equifax or TransUnion score for $19.95 Explanation of your credit score and how lenders view you Positive and Negative factors affecting your score.