use credit union credit report seminar
DESCRIPTION
TRANSCRIPT
UnderstandingYour Credit
Report
Presented by:
USE Credit Union
• How your credit report is used.
• How you can order your own credit report.
• How to dispute incorrect information.
• How your credit score is calculated.
• How can you improve your score.
Today we will cover:
Credit Reporting Agencies
• Equifax – based in Atlanta, GA
• The main bureau that USE Credit Union uses.
• Experian – (formerly TRW) – based in Orange County, CA
• Pulled for additional information or for comparison.
• TransUnion – based in Chicago, IL
• Lenders: Purpose is to evaluate your credit-worthiness and level of risk.
• Employers: Before extending an offer of employment.
• Insurance companies: To establish rate premiums.
• Landlords: To evaluate your risk as a tenant
• Used by many companies for marketing and demographic information.
Who is looking at your Credit Report?
• Information reported monthly or quarterly by financial institutions.
• Most, but not all, financial companies report.
• Smaller institutions may report quarterly or not all.
• Not all institutions report to each of the three main bureaus.
• Reporting is a courtesy, not a requirement or obligation.
Where does this information come from?
What is in my Credit Report?
� Personal Information
� Credit Account Information/Trade Information
� Public Record Information
� Inquiries
� Collection Information
Inquiries
• “Soft hit” vs. “hard hit.”
• One inquiry may decrease score by
a few points.
• Inquiries have a greater impact if you have
few accounts or a short credit history.
• 45 day window for auto and mortgage shopping.
• Ignores all inquiries made 30 days
prior to scoring.
How to obtain a copy of your Credit Report
• Equifax: www.equifax.com
• Experian: www.experian.com
• TransUnion: www.transunion.com
• One free credit report every 12 months
• www.annualcreditreport.com
– Does not provide credit score(available for purchase)
Reasons to check yourCredit Report
• 1 in 6 reports contain errors.
• Inaccurate information can damage your ability to:
- Buy a house
- Rent an apartment
- Obtain credit or insurance
- Open a checking account
- Get a job
- Signals of ID Theft
When information is not accurate
• File a dispute with the credit reporting agency.
• Credit reporting agencies are governed by the Fair Credit Reporting Act.
• Disputes filed directly with the creditor are resolved at their discretion.
• Disputed information not verified within 30 days will be blocked from your report.
• Beware of credit clinics: There is nothingthey can do that you can not do yourself.
FACT ACTAccuracy of Credit Information
• Effective July 1, 2010
• Regulators have identified circumstances when institutions who report information to the Credit Reporting Agencies must investigate disputesabout the accuracy of information on a creditreport when a member makes a request.
• Consumers must submit dispute in writing.
• ** Regulatory changes are taking place that willcontinue to impact credit and credit scores.
What does this mean?
• Reporting institutions must conduct an investigation on a consumer disputewhen it relates to:
• Whether there is individual or joint liability on an account
• Whether the member is an authorized user of thecredit account
• The type of account, principal balance, scheduled payment, or amount of credit limit being reported
• Current payment status, high balance, date a payment was made, amount of a payment made, or the date the account was opened or closed
• A 3 digit number between 300 - 850
• Often referred to as the “FICO” score
• A snapshot of your credit risk at a particular point in time
• A numerical value based on information contained in your credit report
What is a Credit Score?
Benefits of Credit Scoring
• The Credit Score gives lenders a fast, objective measurement of your credit risk:
• Credit decisions are fairer
• Older credit problems count for less
How your score can save/cost you money
Components of the FICO Score
35%
30%
15%
10%
10%
Payment History
Amounts Owed
Length of History
New Credit
Types of Credit
The impact of missing a payment
Revolving Debt Signals
Balances vs. Credit Limit
• Under 15%:
RELAX
• 15% to 20%:
BE CAUTIOUS
•Over 30%
DANGER
The Importance of Capacity
What HURTS your score?
• Missing a payment.
• Credit cards at capacity.
• Closing out credit cards.
• Shopping for credit excessively.
• Opening numerous trades in a short period of time.
• Having more revolving loans in relationto installment loans.
What does NOT affect your score?
• Income, race, religion, age
• Debt ratio (total monthly payments divided by monthly gross income)
• Length of residence
• Length of employment
• Child support or family obligations(Unless they become collection items)
Remember
› Your credit report’s accuracy is your responsibility.
› Financial institutions only read the information provided on the report.
› Credit reporting agencies only report the information provided to them.
› It is the consumer’s responsibility to ensure that information is accurate and current.
› Your credit score is one of many factors that creditors look at.
THANK YOU!
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