Credit ReportsCredit Reportsandand

Credit ScoresCredit Scores

By Julie Chapman For

Credit ReportsCredit Reports

All consumers who use credit have a All consumers who use credit have a credit reportcredit report

Three Major Credit Bureaus:Three Major Credit Bureaus:• EquifaxEquifax• TransunionTransunion• ExperianExperian

What does it include?What does it include?

Personal InformationPersonal Information• Name, Address, Social Security #Name, Address, Social Security #

Employment - Employment - current and formercurrent and former

Account Information -Account Information -what you owe now what you owe now or open accounts and payment historyor open accounts and payment history

Public Records – Public Records – liens, judgments, liens, judgments, bankruptciesbankruptcies

What does it include?What does it include?

Inquiries - when you applied for Inquiries - when you applied for creditcredit

Public Records – bankruptcies, liensPublic Records – bankruptcies, liens

What is NOT included?What is NOT included?

Bankruptcies > 10 years oldBankruptcies > 10 years old

Gender, Ethnicity, Religion, Political Gender, Ethnicity, Religion, Political affiliation, medical history, or affiliation, medical history, or criminal recordscriminal records

Credit ScoreCredit Score

Who can look at my credit report?Who can look at my credit report?

Potential Lenders and Credit Card Potential Lenders and Credit Card CompaniesCompanies

LandlordsLandlords Insurance CompaniesInsurance Companies Employers or Potential EmployersEmployers or Potential Employers Anyone with your written Anyone with your written

authorizationauthorization

Credit ScoresCredit Scores

Rating used to help a lender decide if Rating used to help a lender decide if you qualify for a particular credit you qualify for a particular credit card, loan or servicecard, loan or service

Different than a credit report!Different than a credit report!

Estimate of the risk a company Estimate of the risk a company assumes for lending you moneyassumes for lending you money

Credit ScoresCredit Scores

FICO score is most commonly used.FICO score is most commonly used.

Higher Score = Less RiskHigher Score = Less Risk

Math model that evaluates many Math model that evaluates many types of info in your credit file types of info in your credit file including your credit report.including your credit report.

Credit ScoresCredit Scores

What is in a FICO score?

Graph is from www.myfico.com

What affects your credit score?What affects your credit score?

Payment History Payment History • Late payments Late payments • How long payments have been late How long payments have been late • Number of late balances Number of late balances • Number of accounts paid off on timeNumber of accounts paid off on time• BankruptcyBankruptcy• Write-offsWrite-offs• Collections Collections

From www.myfico.com

What affects your credit score?What affects your credit score?

Amounts Owed Amounts Owed

• Types of accounts owedTypes of accounts owed• Number of accounts owedNumber of accounts owed• Proportion of balances owed to Proportion of balances owed to

credit limitcredit limit

From www.myfico.com

What affects your credit score?What affects your credit score?

Length of Credit HistoryLength of Credit History

• Time since account openedTime since account opened

• Time since activity on accountTime since activity on account

From www.myfico.com

What affects your credit score?What affects your credit score?

New CreditNew Credit

• Number of recently opened Number of recently opened accountsaccounts

• Number of recent credit inquiriesNumber of recent credit inquiries• Re-establishment of positive credit Re-establishment of positive credit

history following payment history following payment problemsproblems

From www.myfico.com

What affects your credit score?What affects your credit score?

Types of Credit UsedTypes of Credit Used

• Number of various types of Number of various types of accountsaccounts

From www.myfico.com

Credit ScoresCredit Scores

Scores range from 300 – 850Scores range from 300 – 850

680 used to be considered very good. 680 used to be considered very good. Now 720.Now 720.

Majority 600 - 700Majority 600 - 700

Credit Reports & Credit ScoresCredit Reports & Credit Scores

Both are used to assess risks of loan Both are used to assess risks of loan money, hiring, leasing to, etc.money, hiring, leasing to, etc.

Some use only the credit score, but Some use only the credit score, but often other factors are considered.often other factors are considered.

Credit Reports & Credit ScoresCredit Reports & Credit Scores

Recommended to check credit Recommended to check credit reports and scores once a year with reports and scores once a year with each credit bureau:each credit bureau:

EquifaxEquifax TransunionTransunion ExperianExperian

Credit Reports & Credit ScoresCredit Reports & Credit Scores

Law requires 2 free credit reports per Law requires 2 free credit reports per year.year.

Must be requested.Must be requested.

Go to the following site to requestGo to the following site to request• www.annualcreditreport.com