Your Credit Report

1. Your Credit Report Understanding the puzzle

2. 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.

3. 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

4. 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.

5. The Big 3 • There are three major credit bureaus: Equifax, Experian (formerly TRW), and TransUnion. • Credit Bureau of Baton Rouge is affiliated with Equifax.

6. 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.

7. 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

8. 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.

9. 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

10. 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

11. 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

12. Inquiries • Two types • External • Internal Internal inquiries do not appear on a lender’s copy of a credit report and do not affect the credit score.

13. Additional Information • Credit bureaus may also report information such as: • Previous address • Warning notifications • Consumer statements

14. 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

15. 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?”

16. What is a credit score? • Credit bureau scores are often called “FICO scores” • FICO scores determine a person’s risk • The higher the score the lower the risk • Each lender has its own strategy for determining an acceptable risk

17. 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?

18. 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.

19. 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?

20. 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. • Don’t close unused credit cards as a short-term strategy to raise your score.

21. 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?

22. What makes up a credit score? • Length of Credit History Tips for Raising your Score • If you’ve been managing credit for a short time, don’t open a lot of new accounts too rapidly.

23. 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?

24. 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.

25. 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?

26. 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 doesn’t make it go away.

27. What makes up a credit score?

28. How the FICO score counts inquiries • Inquiries don’t affect scores that much. • Many kinds of inquiries aren’t counted at all. • The score looks for “rate shopping”.

29. 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!

30. 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.

31. 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

32. 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

33. Info on the Three Credit Reporting Agencies To request a copy, contact the credit reporting agencies directly: • Equifax: (800) 685-1111, www.equifax.com • Experian (formerly TRW): (888) 397-3742 www.experian.com • TransUnion: (800) 888-4213, www.transunion.com

34. Top 5 Credit FAQs: #5 “Should I subscribe to one of those $99 credit report monitoring services?” You shouldn’t 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.

35. 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.

36. 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.

37. 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.

38. Top 5 Credit FAQs: #3 • Bankruptcy Ch. 13 – Remains on file for 10 years if no disposition.

39. 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.

40. 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.

41. 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.

42. 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)

43. Questions? Thank you.