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Credit Reports and Scores

Credit Reports and Scores. Take Charge. The Credit Process. Credit – goods, services, and/or money received in exchange for a promise to pay back a definite sum of money at a future date. How Credit Reports are Created. Credit Reporting Agencies. Three U.S. Agencies: - Equifax

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Credit Reports and Scores

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  1. Credit Reports andScores Take Charge

  2. The Credit Process Credit – goods, services, and/or money received in exchange for a promise to pay back a definite sum of money at a future date

  3. How Credit Reports are Created

  4. Credit Reporting Agencies • Three U.S. Agencies: • - Equifax • - Experian • - TransUnion • If credit has never been used (or reported) an individual will not have a credit report A person’s credit report may vary across the three CRA’s

  5. Information in a Credit Report

  6. Consumer (personal) Information • Name • Current and previous addresses • Telephone number • Full or partial social security number • Date of birth • Employment history Information provided to lenders when applying for credit

  7. Credit Account Information Specific information about each credit account you have or have had

  8. Types of Credit • Closed-end credit (installment) • Open-end credit (revolving) • Borrower must repay the amount in a specified number of equal payments • Definition • Extended as a line of credit established in advance • Features Usually has a contract outlining repayment terms Borrower chooses how much to pay • Automobile loans Education loans Mortgages Examples Credit cards

  9. Public Records • Information from federal, state and county • public court records

  10. Inquiry Information • Requests for an individual’s credit report • Must be a result of actions by the consumer • Or • Be a result of a permissible purpose

  11. Inquiry Information • Inquiries not initiated by you – pre-approved credit card • Inquiries not related to credit – pre-employment check • Impact is reduced if shopping for the same type of loan within a 14-day period • Checking your own report

  12. Types of Lenders Who Report to CRA’s Lenders usually report all information,positive and negative

  13. Types of Data Furnishers Who Report to CRA’s Typically only report when money is owed to them CRA’s are encouraging regular payment information to be reported to help consumers build a positive credit history.

  14. Your Present Self Impacts Your Future Self

  15. Credit Score Mathematical number created to help a lender evaluate the risk associated with lending a consumer money

  16. Credit Scores Most common scoring systems are produced by credit reporting agencies:

  17. Credit Score Impact Credit history helps a lender determine the terms of credit granted $457 $16,452 6.16% 730 8.77% $17,100 $475 660 $516 $18,576 14.43% 590 $2,124 can be saved over the lifetime of this loan because of a good credit score!

  18. Credit History Affects More than Credit

  19. Positive Credit History Positive Credit History Higher Credit Score

  20. Strategies to Build Credit Acquire and positively manage small lines of credit Having no credit history may be just as challenging to a consumer as having a negative history

  21. Requesting a Credit Report Only government-sponsored free website

  22. Accessing Your Credit Score

  23. If an Error is Found

  24. Summary Your Present Self Impacts Your Future Self

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