Credit Reports & Scores

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  • 1. 2.6.1.G1Credit Reports and Scores Advanced Level

2. 2.6.1.G1The 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 dateBorrower Someone who receives something with the promise to return it or to repay what is borrowedCredit HistoryLender Record of the borrowers past loan and credit-related transactionsPerson or organization who makes funds available for others to borrow Take Charge Today August 2013 Credit Reports and Scores Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 3. 2.6.1.G1How Credit Reports are Created LenderReports a consumers account history to CRAsCredit Report Agencies (CRAs)Keep a record of a consumers account history (credit history) Credit ReportsRecord, created by a CRA, of an individuals credit history Take Charge Today August 2013 Credit Reports and Scores Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 4. 2.6.1.G1Credit Reporting Agencies Three U.S. Agencies: - Equifax - Experian - TransUnionA persons credit report may vary across the three CRAsIf credit has never been used (or reported) an individual will not have a credit report Take Charge Today August 2013 Credit Reports and Scores Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 5. 2.6.1.G1Credit Report Detectives Isabella Langley is your new client.Read through her story.Underline any areas of financial concern.YOUR MISSION: (TURN TO PAGE 6 OF YOUR NOTES) 1. Help Isabella understand her credit report 2. Identify what she did to get into this situation 3. Decide what she can do to improve her credit report Take Charge Today August 2013 Credit Reports and Scores Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 6. 2.6.1.G1Information in a Credit Report Consumer (personal) InformationCredit Account InformationFour CategoriesPublic Record InformationInquiry Information Take Charge Today August 2013 Credit Reports and Scores Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 7. 2.6.1.G1Consumer (personal) Information Information provided to lenders when applying for credit Name Current and previous addresses Telephone number Full or partial social security number Date of birth Employment historyPlace a next to Isabellas personal information on her credit report. Take Charge Today August 2013 Credit Reports and Scores Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 8. 2.6.1.G1Credit Account Information Specific information about each credit account you have or have had Types of InformationType of CreditLoan Amount or Credit LimitDateAccount BalancePayment Information Take Charge Today August 2013 Credit Reports and Scores Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 9. 2.6.1.G1Types of Credit Closed-end credit (installment)Open-end credit (revolving)DefinitionBorrower must repay the amount in a specified number of equal paymentsExtended as a line of credit established in advanceFeaturesUsually has a contract outlining repayment termsBorrower chooses how much to payExamplesAutomobile loans Education loans MortgagesCredit cards Take Charge Today August 2013 Credit Reports and Scores Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 10. 2.6.1.G1Types of Credit What section of the Sams Electronic World account on Isabellas credit report describes the type of credit? SAMS ELECTRONIC WORLD Address:AccountNumber:123 MAIN STREET ANYWHERE, AZ 000003624****Status:Open/Past due 60 days. DateOpened:Type:Credit Limit/Original Amount:02/2009Revolving$500Reported Since:Terms:High Balance:02/2010N/A$550Dateof Status:Monthly Payment:Recent Balance:10/2012$0$84 as of 11/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$010/2012Account History: 60 days as of 10-2012 30 days as of 09-2012On the credit report, state whether this a closed-end or open-end credit account? Find an example of a closed-end Take Chargeaccount & Credit Reports and Scores Slide 10 it. credit Today August 2013 highlight/circle Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 11. 2.6.1.G1Loan Amount/Credit Limit Open-end Credit limit (maximum dollar amount that can be borrowed)Closed-end Total amount of loanWhat sections of Sams Electronic World account describe loan amount/ credit limit?SAMS ELECTRONIC WORLDAddress:AccountNumber:123 MAIN STREET ANYWHERE, AZ 000003624****Status:Open/Past due 60 days. DateOpened:Type:Credit Limit/Original Amount:02/2009Revolving$500Reported Since:Terms:High Balance:02/2010N/A$550Dateof Status:Monthly Payment:Recent Balance:10/2012$0$84 as of 11/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$010/2012Account History: 60 days as of 10-2012 30 days as of 09-2012 Take Charge Today August 2013 Credit Reports and Scores Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 12. 2.6.1.G1Date Account Was Opened What section of Sams Electronic World account describes date opened? SAMS ELECTRONIC WORLD Address:AccountNumber:123 MAIN STREET ANYWHERE, AZ 000003624****Status:Open/Past due 60 days. DateOpened:Type:Credit Limit/Original Amount:02/2009Revolving$500Reported Since:Terms:High Balance:02/2010N/A$550Dateof Status:Monthly Payment:Recent Balance:10/2012$0$84 as of 11/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$010/2012Account History: 60 days as of 10-2012 30 days as of 09-2012 Take Charge Today August 2013 Credit Reports and Scores Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 13. 2.6.1.G1Account Balance Amount the borrower still has to pay back to the lender What section of Sams Electronic World account describes account balance? SAMS ELECTRONIC WORLDAddress:AccountNumber:123 MAIN STREET ANYWHERE, AZ 000003624****Status:Open/Past due 60 days. DateOpened:Type:Credit Limit/Original Amount:02/2009Revolving$500Reported Since:Terms:High Balance:02/2010N/A$550Dateof Status:Monthly Payment:Recent Balance:10/2012$0$84 as of 11/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$010/2012Account History: 60 days as of 10-2012 30 days as of 09-2012 Take Charge Today August 2013 Credit Reports and Scores Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 14. 2.6.1.G1Payment Information What sections of Sams Electronic World account describe payment information? SAMS ELECTRONIC WORLD Address:AccountNumber:123 MAIN STREET ANYWHERE, AZ 000003624****Status:Open/Past due 60 days. DateOpened:Type:Credit Limit/Original Amount:02/2009Revolving$500Reported Since:Terms:High Balance:02/2010N/A$550Dateof Status:Monthly Payment:Recent Balance:10/2012$0$84 as of 11/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$010/2012Account History: 60 days as of 10-2012 30 days as of 09-2012 Take Charge Today August 2013 Credit Reports and Scores Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 15. 2.6.1.G1Public Records Information from federal, state and county public court records Collection Agencies Businesses hired by lenders to pursue payments on debts not paid back according to contract termsBankruptcy When an individual or business is not able to repay outstanding debtsTax liensForeclosure Taxes not paid in full Borrower fails to keep up with mortgage payments and the lender takes possession of the property Take Charge Today August 2013 Credit Reports and Scores Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 16. 2.6.1.G1Potentially Negative Items Public Records Credit lenders may carefully review the listed items below when they check your credit history. Please note that the account information with some public records, such as a lien or judgment, may also appear later in this report.CITY OF ANYWHERE COURT CLERK Address:IdentificationNumber:1 COURTHOUSE LANE ANYWHERE, AZ 1100010-11-15Plaintiff: CITY OF ANYWHEREStatus:Status Details:Collection account. $680 past due as of 12-2012The item was verified and updated as in Dec 2012.DateFiled:ClaimAmount:06/01/2012$358DateResolved:LiabilityAmount:N/AN/AResponsibility: INDIVIDUALMAIN COLLECTION AGENCY Address:AccountNumber:1001 TOWN BLVD ANYWHERE, AZ 10000000102331****Status:Collection account. $680 past due as of 01-2013 DateOpened:Type:Credit Limit/Original Amount:07/2004Revolving$550Reported Since:Terms:High Balance:08/2004N/A$680Dateof Status:Monthly Payment:Recent Balance:10/2012$0$680 as of 10/2012Last Reported:Responsibility:Recent Payment:INDIVIDUAL$01