Whos Got Your Number

1
Whos Got Your Number? Credit Reporting
2
Agenda

• Your Credit History
• Whats in Your Report?
• Who Reads Your Report and What They Learn
• FICO Scores

3
Your Credit History

• Built on factors related to your personal and
  financial life
• Made available to consumers and creditors as a
  credit report
• Reported regularly by your creditors to three
  major repositories called credit bureaus

4
Major Credit Bureaus

• Equifax
• www.equifax.com
• 1-800-685-1111
• Experian
• www.experian.com
• 1-800-311-4769
• TransUnion
• www.transunion.com
• 1-800-888-4213

5
Facts to Remember

• Credit bureaus do NOT create your credit report
  they only receive, store, organize, and
  distribute information sent to them by your
  creditors
• Creditors may report information to any or all
  bureaus your reports may not look/read the same

6
Whats in Your Report?

• Personal Identification Section
• Name on file
• Social Security number
• Current home address
• Previous address(es)
• Current date
• Employment information
• Date of birth
• Credit bureau name, address, phone number,
  confirmation number

7
Whats in Your Report? Additional Items

• Credit account information, account number, date
  account opened, high credit, credit limit, terms
  duration, status of account, date of last
  activity, etc.
• Account history, status code, descriptions
• Public record, bankruptcy, liens, judgments
• Inquiries

8
Who Reads Your Report?

• Credit Card Companies
• Auto Dealers
• Landlords/Mortgage Professionals
• Banks/Credit Unions
• Utility Companies
• Service Providers (cell phone, cable, etc.)
• Potential Employers

9
What Do They Learn from Your Report?

• Type of accounts you have/had
• Payment history
• Who owns the account and how youre related

10
Types of Accounts

• O Open (line of credit)
• R Revolving (credit card)
• I Installment (car payment)

11
What If You Find Errors?

• Fair Credit Reporting Act (FCRA) requires bureaus
  to
• Provide personal telephone help to consumers with
  questions about their credit reports
• Accept your explanation of the error in a written
  statement
• Handle disputes within 30 days unless more
  information is needed
• Remove the incorrect information after confirming
  with original creditor

12
What is a FICO Score?

• A scoring model devised by the Fair Isaac
  Corporation to standardize the way creditors
  determine creditworthiness
• A determining factor in interest rates and terms
  offered to you by credit grantors
• Estimates the risk a company incurs by lending
  you money or providing you with a service the
  higher the score, the less risk you represent
• May be reported differently at the 3 credit
  bureaus
• A 3-digit number from 300 850 that indicates
  how credit bureaus rate your credit history

13
The Higher FICO, the Better!

• 500 and below worst interest rates
• 500 580
• 580 620
• 620 640
• 640 660
• 660 680
• 680 700
• 700 720
• 720 and above best interest rates

14
The Higher FICO, the Better!

• As a general rule, those with a score above 650
  will receive the lowest interest rate loans.
  Those who score in the 620 to 650 range may have
  to provide additional documentation and
  explanations to the lender to qualify for the
  same rates. Those with a score below 620 will
  likely pay a much higher interest rate for the
  same loan.

15
FICO Score Example Mortgage Loan
According to myFICO.com, a score of 624 would
likely qualify an applicant for a 30-year
fixed-rate mortgage of 7.41 percent. If the
applicants score increased by 51 points to 675
the interest rate would drop to 6.60 percent.
Over the life of the loan those 51 points would
save the applicant 68,548.15 in interest charges
on a 350,000 mortgage! Conversely, if an
applicants score were to drop below 520, the
interest would increase to upwards of 8.275 and
the applicant would pay approximately an
additional 221,013.42 in interest
charges. Courtesy of myFICO.com
16
FICO Score Example
17
How is FICO Calculated?

• Past payment history (35)
• Outstanding debt (30)
• Length of credit history (15)
• New applications for credit (10)
• Types/mix of credit (10)

18
Factors Affecting a FICO Score

• Payment history A record of late payments on
  your current or past credit accounts will lower
  your score
• Public records Matters of public record such as
  bankruptcies, judgments, and collection items may
  lower your score
• Amount owed Owing too much will lower your
  score, especially if youre approaching your
  total credit limit

19
Factors Affecting a FICO Score

• Length of credit history In general, a longer
  credit history is better
• New accounts Opening multiple new accounts in a
  short period of time may lower your score
• Inquiries Whenever someone else gets your
  credit report, an inquiry is recorded. A large
  number of recent inquiries may lower your score.
• Accounts in use The presence of too many open
  accounts can lower your score, whether youre
  using the account or not.
• www.equifax.com

20
Cant Pay Your Bills?

• Contact your creditor(s) immediately before
  they pay someone to find you!
• Contact the local Consumer Credit Counseling
  Service (CCCS) or visit www.nfcc.org for
  objective help
• Credit affected only if you initiate a debt
  repayment program with the service

21
Credit To-Do List

• Assess your values
• List your expenses
• Check your estimates based on a period of
  tracking expenditures
• List all your debts
• Make a spending plan (budget)
• Order your credit report and score

22
Helpful Resources

• www.annualcreditreport.com
• Fair Isaac Corporation
• www.myfico.com
• BankRate
• www.bankrate.com
• National Foundation for Credit Counseling
• www.nfcc.org

23
For More Information
Mona Ghuman Client Training Manager Citibank
The Student Loan Corporation (847)
496-7146 mona.k.ghuman_at_citigroup.com