Your parents can’t fix everythingHow to rescue your credit—before it needs saving!

Begins when you choose and use credit services

Your credit history

• Influences your ability to obtain products and services—and how much they’ll cost you• Credit cards• Car loans/leases• Private student loans• Mortgages, leases• Employment

Your credit history matters!

A good credit history will help you access services to improve your quality of life

A bad credit history will hold you back–and your missteps will follow you for as long as 10 years

How it worksThree credit reporting companies update and distribute consumers’ information: Equifax, Experian and TransUnion

Credit reporting companies update

consumer’s information

Consumer applies for credit

Creditor requests information about

consumer’s financial history

Credit profile used to determine whether to

authorize credit—and if so, at what interest rates

Consumer is granted (or denied) credit

Credit grantor reports activities back to credit

reporting companies every 30 days

What is a credit report?

Tells lenders how much

credit a consumer has

used and whether they

are seeking new sources

Lists the type of credit a consumer uses, the length of time the accounts have been open, and whether the consumer has

paid their bills on time

Prepared by credit reporting

companies for use by credit grantors and other parties with permissible

purpose

Summary of a consumer’s

financial reliability

Details a consumer’s credit history as it has been reported

1 3 5

2 4

Types of credit reports

1. Abbreviated version of consumer credit report that creditors see

2. Does NOT contain limited inquiries or account reviews

3. Contains credit inquires

Subscriber report (Credit grantor version)

1. Lists all inquiries including limited inquiries and account reviews

2. Only consumers can request this version

Consumer disclosure(Consumer version)

Elements of a credit report

What is NOT in a credit report?What is in a credit report?

Race

Gender

Religion

Sexual orientation

National origin

Medical history

Checking or savings account balances

Income

Driving record

Report card

Identifying information

Credit history

Inquiries

How can you get a copy of your credit report?

• You get one free report every 12 months from each of the three bureaus!

• Visit AnnualCreditReport.com to download• You can also get free reports at CreditKarma.com

What is a credit score?Sum calculated by vendor and used by lenders as an indicator of how likely consumer is to repay loans

Snapshot in time of the consumer’s current financial situation

Generated by a mathematical formula

Each credit grantor has its own strategy for interpreting the credit score

If credit is denied after reviewing the score, credit grantors must disclose reasons for the decision

What’s in a credit score?

What is NOT calculated in a credit score?What’s calculated in a credit score?

Demographic informationAge, race, religion, national origin, gender, sexual orientation, marital status, residence, child/family support obligations

Employment information Salary, occupation, title

Other credit informationInterest rates charged by other credit grantors, usage of a credit counseling company

Payment history

Outstanding debt

Credit account history

Recent inquiries

Types of credit used

What are the Five Parts that go into a Typical Score? What Percent for each part?

Payment history: 35%- Account payment

information- Adverse public records- Amount of delinquent

accounts- Number of past due

items

Types of credit used: 10%- # of various types of accounts

New credit: 10%- # of recently opened

accounts- # of recent inquiries

Credit history length: 15%- Time since accounts opened

Accounts owed: 30%- Outstanding balances on accounts- Proportions of balances to total

credit limits- Proportion of installment loan

amounts

What’s a good credit score?

Very poor

Poor Fair Very good

Good

Typically the higher the score the better

Individual credit grantors decide range of acceptability

For example, a consumer’s credit score might be 680

Based on this particular model, here is how the consumer may be viewed by a certain lender

300 900400 500 600 700 800

You are here

You are here

Credit management tips

• Your parents can make a payment for you.• Your parents cannot make a late payment

not late.

A late payment stays on your credit history and impacts your credit score for as long as 7 years. However, the impact lessens as time passes.

The single most important component of your credit score is whether you make payments on time

More credit management tips

• Check your credit report every three months

• Improve your credit score 50 points or to above 650

• Reduce your debt balances to below 35% of available credit limit

• Create a budget and stick to it

• Dispute negative inaccuracies on your credit report

• Remove expired debts and collection accounts

• Consider refinancing

• Guard against identity theft

Set goals Clean up your records

Top 5 misconceptions

Your credit score will drop

if you check your credit

report

1Closing old

accounts will improve your credit score

2Once you pay off a negative record, it is

removed from your credit

report

3Being a co-

signer doesn’t make you

responsible for the account

4Paying off a

debt will add 50 points to your credit score

5

If you find a mistake…

First, correctly identify inaccurate information

Next, contact the credit grantor responsible for the inaccuracy and try to resolve the issue

If this does not work, contact the credit reporting company(s) reporting the inaccurate information

Credit reporting company(s) will investigate the issue

At the conclusion of the investigation, or within 30 days, you’ll be contacted

You have the right to dispute inaccurate information on your credit report

What questions do you have?

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