Credit Report and Credit Score. Today’s Topics Credit reports Credit score components How to...

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Credit Report and Credit Score

Transcript of Credit Report and Credit Score. Today’s Topics Credit reports Credit score components How to...

Credit Report and Credit Score

CHEATHAM, KELLI
This presentation was created for an adult audience and is recommended for general credit and credit report consumer education requests. Please contact Member Education for updates and supplemental handouts.

Today’s Topics

Credit reports

Credit score components

How to establish positive credit history

Credit card features

Credit card rules

How to manage your card responsibly

Credit Bureaus

Provide information to retailers, financial institutions, insurers, potential employers, and other organizations.

Three Major Credit Bureaus

Equifax Phone: (800) 685-1111 Website: www.equifax.com

Experian Phone: (888) 397-3742 Website: www.experian.com

TransUnion Phone: (800) 888-4213 Website: www.transunion.com

Credit Report

A document that contains factual records of an individual’s credit payment history.

Establishing Credit

Open a checking or savings account at your local financial institution.

Build a relationship with your financial institution to improve your chances of obtaining a credit card or loan.

Your Credit Report

Personal identification

Trade lines

Inquiries

Public records

Name John Doe

Date of Birth January 1, 1989

Social Security Number XXX-XX-XXXX

Current Address 123 Credit Union LaneRaleigh, NC 27609

Account Type Company

Account # Balance Negative Items

Installment SECU XXXXXX $25,000.00

No

Revolving SECU XXXXXX $1,250.00 No

2. Accounts Summary

1.Personal Information

Credit Report Information

Date Company requesting credit record

09/01/2010 Credit Union

10/08/2010 Cell Phone Company

Account Type Company Status Delinquency Description

Revolving Credit Union

Pays as agreed

60 days past due

No

4. Negative Items

3. Inquiries

Credit Report Information

Credit Score

Your Credit Score

A credit score measures the probability a borrower will make late payments within the next two years.

Example of a scoring system: Equifax 300-850 Experian 330-830 TransUnion 150-934

The higher your score, the less risk you represent to lenders and the more favorable they’ll view your application.

Your Credit Score

Most financial institutions utilize credit scoring for a loan qualification and rate pricing.

At SECU, your credit score alone does not determine your credit worthiness, as the Credit Union will look at several factors for qualification. Additionally, SECU does not utilize a tiered rating system for credit scoring.

Your Credit Score Can Help You

Receive better credit offers

Obtain lower interest rates

Acquire quicker credit approvals

Your Credit Score Can Help You

Gain employment

Obtain a home

Buy a car

Pay for education

Negative Information

Accurate negative information- 7 years

Bankruptcy information- 10 years

Criminal convictions- no time limit

Default information on government insured or guaranteed student loans- 7 years after guarantor actions

Unpaid judgment- 7 years

Improving Your Credit Report

Contact the consumer reporting company and creditor in writing for disputes.

Pay your bills on time.

Catch up on missed payments immediately and avoid future late payments.

Improving Your Credit Score

Keep your credit card balances low.

Note: Paying off a collection account or closing an account with a missed payment will not remove it from your report. This type of information may remain on your report for 7 years.

Your Free Credit Report

Web: www.annualcreditreport.com Toll Free Number: 1-877-322-8228

Annual Credit Report Request ServiceP.O. Box 105281Atlanta, GA 30348-5281

Credit Cards

Features of a Credit Card

Annual percentage rate (APR)

Annual fee

Credit limit

Grace period

Other fees

Information provided by www.balancepro.net

Did You Know?

There is no defined payoff date- credit card payments could go on forever.

Monthly minimum payments vary, and is based on your balance.

Credit cards usually have higher interest rates than most types of credit.

The least-favorable type of debt is called consumer debt, which is debt for items that won’t increase in value over time.

$25 purchase at grocery store

Card is approved & consumer signs receipt

Grocery Store deposits receipt to their financial institution

Financial Institution sends transaction electronically to VISA

Financial Institution bills member for purchase

Credit Card Payment Process

VISA processes transaction: credits merchant account and debits the financial institution account since the financial institution is the card issuer.

Member pays credit card bill

Credit Card: Advantages

Purchase items now

Safer than carrying cash

Record of purchases (statement)

Convenient

Credit Card: Disadvantages

InterestFees Risk of increased debtMay have difficulty repaying if

you have a high balance

Credit Card Rules!

Your credit card company must notify you: When they increase your rate or change certain fees

When they make significant changes in terms of your card

Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”

Credit Card Rules!

No interest rate increases for first year

Increased rates apply to new charges only

Restrictions on over-the-limit transactions:

You must opt-in to allow transactions that take you over your credit limit

Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”

Credit Card Rules!

Underage consumers protection If under 21, you must prove that you can

make payments or you need a cosigner to open a credit card.

For more information visit the Federal Reserve’s website http://www.federalreserve.gov/creditcard

Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”

What Are Your Responsibilities?

Read and understand the terms/conditions

Pay your debt on time Contact your creditor if you are

unable to make a payment

Report your card if it is lost or stolen, immediately.

Protect your card - don’t give your card information to anyone over the phone unless you initiated the call and know with whom you are speaking.

What Are Your Responsibilities?

Bottom Line…

Always pay more than the minimum on your credit card or you may find you are only paying towards the interest every month.

Be cautious when making purchases on your credit card, only charge what you can immediately pay off.

Questions?