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Credit Scoring and Reports

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Social Security Number. Unpaid child support. Credit card purchases. Driver's license number ... Motor vehicle records. Actual items purchased by credit card ... – PowerPoint PPT presentation

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Title: Credit Scoring and Reports


1
Credit Scoring and Reports
  • Sharla Godbehere

2
Credit 101 Quiz
  • Which of the following appear on a credit report?
  • Gender
  • Credit score
  • Lien
  • Social Security Number
  • Unpaid child support
  • Credit card purchases
  • Drivers license number

3
Credit 101 Quiz
  • Which of the following appear on a credit report?
  • Gender
  • Credit score
  • Lien
  • Social Security Number
  • Unpaid child support
  • Credit card purchases
  • Drivers license number

4
What is not included in a credit report?
  • Checking or savings account data
  • Bankruptcies more than 10 years old
  • Charged-off debts or collection items more than
    seven years old
  • Gender, ethnicity, religion or political
    affiliation
  • Medical history
  • Criminal records
  • Credit score
  • Motor vehicle records
  • Actual items purchased by credit card

5
Sample Equifax Credit ReportTM
6
FCRA and Free Reports
  • 2003 Amendment includes a provision for all
    consumers to be eligible for one free credit
    report annually from each credit reporting agency
  • Free annual reports phased in geographically
  • December 1, 2004 for Western states
  • March 1, 2005 for Midwestern states
  • June 1, 2005 for Southern states
  • September 1, 2005 for Eastern States
  • Includes credit reports but not credit scores

7
AnnualCreditReport.com
  • Centralized site developed by all three credit
    reporting agencies (CRAs)
  • Each CRA manages its own free credit report
    ordering process
  • Authentication process verifies consumers
    identity before delivering a report online
  • Asks multiple choice questions about information
    not typically found in consumers wallets
  • System will not send e-mails beware of scams
  • Equifax is the only CRA offering the FICO score
    to consumers

8
What is a Credit Score?
  • Rating used to predict the risk a lender assumes
    in granting a consumer credit
  • How likely is the customer to make their payments
    in the next two to three years?
  • Based on a complex mathematical model that
    evaluates many types of information found in a
    credit file
  • Consumers have more than one credit score but
    FICO scores are used by over 70 of nations
    creditors

9
What Factors Affect a FICO Score?
New Credit (10)
Payment History (35)
Type of Credit Used (10)
Length of Credit History (15)
Amounts Owed (30)
10
What Factors Do Not Affect FICO Scores?
  • Any information that is not in credit report
  • Geography
  • Age
  • Employment information
  • Certain inquiries consumer-initiated,
    promotional, account review or employer

11
Facts About FICO Scores
  • Ranges from 300 to 850, the higher the score the
    lower the credit risk
  • Majority of scores in 600s and 700s
  • For a score to be calculated, a credit report
    must
  • Contain at least one account that has been open
    for six months or more
  • At least one account that has been updated in the
    past six months
  • Scores are dynamic and change as data is updated
    by credit reporting agency

12
NCHELP Models
  • Developed by Equifax exclusively for NCHELP
    members
  • Repayment Evaluator
  • Analyzes portfolio to develop servicing and
    collections strategies
  • Allows assessment of portfolio value prior to
    secondary market purchase

13
NCHELP Models (continued)
  • Delinquency Evaluator
  • Identifies accounts most likely to pay
  • Rank orders delinquent accounts according to
    collectibility
  • Default Evaluator
  • Focuses on accounts later in credit lifecycle
  • Identifies candidates for loan consolidation or
    rehabilitation programs

14
Account Management Triggers
  • Automatic notification of significant changes on
    existing accounts
  • New credit inquiry
  • New addresses
  • New trade line
  • Balance decrease
  • Change in file status
  • New personal bankruptcy
  • Death notice

15
Personal Solutions
  • Equifax Credit Report
  • Equifax Credit Watch -- Trial Cards
  • Alerts to changes in credit report, defense
    against identity theft
  • Score Power
  • FICO score, credit report and score simulator to
    show how changes improve scores
  • Score Watch
  • Manage score to target desired interest rates
  • Alerts to significant change in score

16
Personal Solutions
  • 3-in-1 Report
  • User-friendly combined report with line by line
    comparison from all three credit reporting
    agencies
  • Prepares for major purchases
  • Home Valuator
  • Property valuation and record information
  • Equifax Credit Rankings
  • Geographical averages of credit activity

17
Consumer Tools
  • www.mycrediteducation.com
  • Educational CD
  • Equifax Toolbar
  • Protect against fraud
  • FREE add-on to Internet Explorer that combines
    Pop-Up Blocker, a Google search, and Equifax's
    new ScamBlocker
  • Developed and powered by EarthLink

18
Thank you!Please be sure to complete your 2005
DMC evaluation forms!
  • Sharla Godbehere
  • Equifax
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