revised credit
DESCRIPTION
TRANSCRIPT
1
Unlocking Credit
& Identity Theft
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Introduction
Jesse OstdiekPinnacle Bank
Real Estate BrokerVice President-
Mortgage Lending
402-960-0330
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What to learn…• What is FICO?
– Range & Averages– How it helps you– What makes up your score– Tips to improve your score– Credit Statistics
• Your Credit Report– What’s inside– Myths and Truths– Errors & How to Correct them– Your Rights– How to monitor & freeze your credit
• Identity Theft– Statistics– How they get your info– 6 Warning Signs– How to Protect Yourself– What to do if it happens
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Your Fico Score
• FICO - Fair Issac Corporation (credit scoring model)• Important measurement that affects your ability to
get credit, the terms & payment• Most trusted and widely used score
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What is a FICO Credit Score
• 3 Digit Score: Estimates a consumer’s willingness & ability to repay a debt based on previous behaviors
• Statistical analysis that removes the judgmental & subjective aspects of determining whether credit should be granted
• Over 75% of mortgage lenders & 90% of the top 100 lenders use it to determine credit worthiness
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Range & Averages
• Ranges between 350 to 850
• Most fall between 600–800
• > 740 equals the Best Rates & Terms
• Nebraska average: 695
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Does it Really Matter?• Borrower 1 $240,000 30 Yr Mortgage Loan
– Score: 741• 4.75% with Monthly P&I : $965• Total Interest: $162,400
• Borrower 2– Score: 739
• 4.875% with Monthly P&I : $979• Total Interest: $167,450• Costs $14 more monthly, $168 annually or $5000 more over 30 yrs
• Borrower 3– Score: 640
• 5.5% with Monthly P&I : $1050• Total Interest: $193,000• Costs $95 more monthly, $1,140 annually or $30,600 more over 30 yrs
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How Credit Scoring Helps You
• People Get Loans Faster
• Credit Decisions are Fairer
• Credit Mistakes Count for Less
• More Credit is Available
• Credit Rates are Lower Overall
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What Makes Up Your Fico Score
• 35% - Payment History
• 30% - Amounts Owed & Type
• 15% - Length of Credit History
• 10% - New Credit
• 10% - Types of Credit Used
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Tips on Improving Your Credit Score
• Payment History– Get Current & be on time– Avoid collections, they stay for 7yrs
• Amounts Owed– Amounts Owed vs. Available Credit– Keep low balances , increase credit limits
• Length of Credit History– New accts lower your overall avg acct age– Longer history with creditor is better
• New Credit– Rate shop within 30 days– Limit requests for new credit
• Types of Credit Use– Use all types of credit including credit cards
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Credit Statistics
• # of Credit Obligations Per Person
• Past Payment Performance
• Credit Credit Utilization
• Total Credit Utilization
13; of which 9 are credit cards & 4 installment
40% of credit card holders carry a balance of < $1000 15% are in excess of $10,000
< than 50% have been 30 days lateOnly 3 of 10 have been 60 days late77% have never been 90+ late
Excluding mortgage, 48% carry less than $5000 of debt. 37% have more than $10,000 in debt
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Credit Statistics
• Total Available Credit
• Length of Credit History
• Credit Inquiries
Typical consumer has access to $19,000 on credit cardsMore than half use < 30% of limit1 in 17 use > 80% of card limit
Avg. consumer has had only 1 inquiry in the past year.Fewer than 6% had 4+ in last year
Avg. oldest trade line is 14 yrs25% have 20+ yrs of credit historyOnly 1 in 20 have < 2 yrs of history
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Unlocking Credit
& Identity Theft
Your Credit Report
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What’s In My Credit Report?
• Identifying Information– Name, Address, Social Security #, DOB, employment & residence history. This
info is not used in determining your credit score
• Trade Lines– Your accounts, payment history & specific details of each acct
• Credit Inquiries– List of all creditors that have accessed your credit recently
• Public Record and Collection Items– Information collected from state & county courts including overdue debt from
collection agencies, bankruptcies, liens, child support & judgments
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Who Keeps Track of My Credit
• The Three Credit Bureaus
– Experian
– Equifax
– TransUnion
You have the right to access Your Credit ReportOnce Each Year from each or 3 times a year total
AnnualCreditReport.com
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Types of Credit Reports
• One Bureau Credit Report– Most Companies Use
– Consumer can pull for free
– One or no FICO scores
• Tri-Merged Credit Report– Most Mortgage Lenders Use
– Combines all three Bureaus
– All three FICO scores
*Consumer ReportMore Secure: No Social security or account numbers shown
Free if denied for credit, must request in writing
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Credit Score Facts & MythsMyth
• Score solely determines whether I get credit
• A poor score will haunt me forever
• Credit scoring is unfair to certain types of people
• My Score will drop if I apply for new credit
Fact
• Lenders use many factors in determining whether to loan.
• Just the opposite is true. It is a snapshot of your risk at that particular moment.
• No, credit score only considers credit related information.
• Not Necessarily. You have 30 days on auto and mortgage inquiries to make inquiries without penalty.
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Fixing Mistakes & Errors
How Credit Mistakes are Made• Person applies under different names
(Robert Jones vs. Bob Jones)
• Clerical Errors in reading or inputting
• Loan or Credit Card payments applied to wrong account
Fixing Credit Errors• Contact both Bureau & Creditor to
dispute– Online or mail
• Both are responsible for correcting the error
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Sample Credit Report Dispute Letter
DateYour NameYour AddressYour City, State, Zip Code
Complaint DepartmentName of Credit BureauAddressCity, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of thereport I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) isinaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted ( or request anotherspecific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supportingmy position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (list what you are enclosing)
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Know Your Rights• Right to receive copy of your credit
report from each bureau once per year
• To know the name of anyone who has received your credit report or inquired
• Receive your credit report, upon your written request, if you have been denied for credit
• Have right to add a summary explanation to your credit report regarding disputes
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Credit Monitoring Options
• Review your credit report from each bureau annually– Federal law gives you the right to one free copy of your credit– Annualcreditreport.com ( consumer site)– Other sites like freecreditreport.com sell their services
• Subscribe to Monthly Monitoring Service:– Use one of the three bureaus monitoring service– Costs range from $5 to $25 for basic monthly monitoring
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Lock or Freeze Your Credit• A Security Freeze means your file cannot be shared with
potential creditors.
• No new accounts can be opened without contacting you & getting your permission
• Can prevent new account identity theft
• Can be temporarily unfrozen
• $15 per Bureau per person
Step by Step Guide:
http://www.consumersunion.org/pdf/security/securityNE.pdf
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Identity Theft
“Prevention is Better than the Cure”
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ID Theft
• Statistics – 11 million
• How they get your info
• 6 Warning Signs
• How To Protect Yourself
• What to do if Identity Theft Strikes You?
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2009 Statistics11.1 Million Adult Victims
Increased by 12% Highest increase in last 7 years
Total Fraud Amount: $54 Billion
4.8% of the U.S. population was a victim of identity fraud
Average Fraud Amount : $4841
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2009 Statistics
13% of fraudCommitted by someone
the victim knew
21 hours & $373 Time & Money spent out of
pocket resolving the crime
18-24 Year OldsMost likely victims
Time Until Discovery:38-48% within 3 months
9-18% take 4+ years
Odds of Thief Going to Jail: 1 in 1000
Estimated $221 Billion a year
lost by businesses worldwide
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How they get your Personal Info
Lost or stolen Wallets
Card Skimming
Mobile Smartphone
Mailbox raiding/dumpster diving
Online Methods-Email
Data Breaches
“Friendly Theft”
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By The Numbers
43%From Stolen Wallets
Or Documents
11%Stolen Online
38%Debit/Credit CardNumbers Stolen
Albert Gonzalez
30 Million credit card and account numbers stolen
Several large corporate databases hacked
Over $200 Million in Losses
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6 Warning Signs of Identity Theft
• Receive billing statements for credit you’ve never applied for
• Your Credit Card bill doesn’t come at all
• You billing statement includes charges you didn’t make
• Your credit card is unexpectedly declined for being over the limit
• Calls from debt collectors about accounts that aren’t yours
• Unexpectedly denied for a credit card or loan
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How to Protect Yourself
• Monitor Your Credit
• Computer Security
• Protect Sensitive Information
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Monitor Your Credit!
• Alert you to new credit & inquiries
• Some monitor web for your info
• Services cost $10-20 per month
• Critics say you can do most of this
• Identity Theft Services– Life Lock– ID Watchdog
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Basic Computer Security
• Password protect your home wireless network• Don’t download attachments w/o scanning• Keep Up to Date Security Software
– Anti virus & anti spy ware
• Use a Firewall• Install Windows Updates• Be careful where you click-phishing
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Basics of Protecting Your Information
• Use a Shredder!
• Opt out of pre-approved credit offers
• Safeguard your SS#
• Don’t email sensitive information
• Don’t print SS / Driver’s license # on checks
• Consider a Locked Mailbox or PO Box
• Cut up Old Credit Cards
• Shop securely online
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What to do if it happens to you?
• Notify, monitor & freeze Credit• Contact creditors immediately if
an account is opened• Report to Law Enforcement• If checks, ATM, Debit cards or
Bank accts are stolen, contact your Bank immediately
• Report to FTC• Keep good records
http://www.privacyrights.org/fs/fs17a.htm
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In Summary….Lets Review• What is FICO?
– Range & Averages– How it helps you– What makes up your score– Tips to improve your score– Credit Statistics
• Your Credit Report– What’s inside– Myths and Truths– Errors & How to Correct them– Your Rights– How to monitor & freeze your credit
• Identity Theft– Statistics– How they get your info– 6 Warning Signs– How to Protect Yourself– What to do if it happens
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Credit Bureaus
• Transunion– 1-800-680-7289– www.transunion.com– Fraud Victim Division– P.O. Box 6790– Fullerton, CA 92834-6790
• Experian– 1-888-397-3742– www.experian.com– P.O. Box 9532– Allen, TX 75013• Equifax
– 1-800-525-6285– www.equifax.com– P.O Box 740241– Atlanta, GA 30374-0241
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Other resources
• Annual Credit Report– www.annualcreditreport.com
• Reduce Telemarketer Calls– 1-888-382-1222– www.donotcall.gov
• Protect Your Privacy– Remove your name from pre-
approved credit applications – www.optoutprescreen.com
• U.S. Department of State– Report lost or stolen passport– 1-877-487-2778– www.travel.state.gov
• Social Security Administration– Only to replace a missing or
stolen social security card– www.ssa.gov
• Federal Trade Commission– 1-877-438-4338– www.consumer.gov/idtheft
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Other Resources
• Identity Theft 911– Extensive Online center– www.identitytheft911.org
• Privacy Rights Clearinghouse– Nonprofit consumer info– www.privacyrights.org
• Identity Theft Resource Center– Non-profit support– www.idtheftcenter.org
• US Postal Service– www.usps.com
• State Attorney General– www.naag.org
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Learn More….
Visit our websitePinnacleBankRealEstate.com
402-960-0330
Credit and Identity Theft EducationFor a Copy of this presentation
Click “Home”, then “Credit and Identity Theft”Input pinnaclebank as password
8 Steps to Effective Home Buying EducationClick 8 Steps To Buy at the top