Welcome! Complying with the Federal Mandate: Requirements and Best Practices. Access Code: #

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1 Welcome! Complying with the Federal Mandate: Requirements and Best Practices Dial-In Info: (866) Access Code: # If you are having technical difficulties, please Credit Builders Alliance, Inc. Some rights reserved. 1A2

2 Welcome! Please TYPEany QUESTIONS into the CHATbox during the webinar! This webinar is being recorded. All participants are on mute Credit Builders Alliance, Inc. Some rights reserved. 1A2

3 Poll I feel confident that I understand how to read and interpret credit reports Yes No Not Sure info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

4 Agenda The Difference Between a Consumer Disclosure Credit Report and a Business Division Credit Report Quick Overview Reading and Interpreting Credit Reports Deep Dive Q&A info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

5 Thank You This webinar is made possible with funding from the Annie E. Casey Foundation, a private charitable organization, dedicated to helping build better futures for disadvantaged children in the United States. We thank them for their support info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

6 Business Division Reports Advantages of Business Division Reports 1. Reports may be pulled for consumers without Social Security Numbers or who may not be able to answer the security questions required to access a report online through annualcreditreport.com. 2. Scores may be pulled along with reports for significantly less than the cost of purchasing a score through annualcreditreport.com. 3. Reports may be pulled multiple times a year as long as they are pulled for permissible purposes. 4. Reports may be pulled in batches for greater efficiency. Challenges with Business Division Reports 1. Information may look different than it does on a Consumer disclosure report, may be harder to interpret, and may not include important details for disputes like the names of original creditors. 2. CRA contracts have specific covenants about how authorized pullers may and may not share report information or scores with consumers. 3. Numerous codes listed throughout the reports may be confusing. 4. Some information, such as medical debt, may not be clearly marked as such. 5. The names of original creditors may not be provided, making it harder to contact creditors directly related to disputes. info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

7 Consumer Disclosure Reports Advantages of Consumer Disclosure Reports: 1. Easy to read. 2. Include information about the "Date of First Delinquency," or the date that negative information will "age-off" of a report. 3. List the names of original creditors if an account has been sold to one or more collection agencies, which provides a pathway to disputing errors. 4. Include instructions on how to dispute errors. 5. Allow consumers to monitor and manage their own credit reports. Challenges with Consumer Disclosure Reports 1. Each CRA displays the information they have linked to a consumer s identifying information. If the information entered to request the report varies, then the information in the report may vary. Only the information that is included in that report will be scored. 2. May be difficult to access online due to security questions that may use complicated wording or be confusing, which can make it difficult for consumers to answer required identification information. info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

8 CLARIFI Understanding Your

9 Clarifi We create hope by helping people identify and secure the most important assets in their lives.

10 A Non-Profit Community Service Since 1966 Education Programs Counseling Programs Financial Smarts Financial Smarts for Seniors FinanciallyHers Philadelphia Saves Budget and Credit Debt Management College Bankruptcy Housing

11 Worksheets Rules of Engagement Participant Guide Respect Privacy Ask a question now!

12 You and Your Credit Have you ever had: Credit card? Loan? Utilities in your name? Cell phone with a monthly bill? This helps to make up your credit history 12

13 What is a Credit Report? It shows: Credit History Personal Information Legal Actions Inquiries

14 Lenders Employers Why Should You Care? Insurance companies State or child support enforcement agencies Cell phone companies Landlords Utility Companies

15 Why Should You Care? Increased chances your application will be approved Makes it possible to achieve important goals Reduces cost of credit 15

16 Credit Bureaus There are three major bureaus: Information will vary for each bureau, so it s important to obtain a copy of your credit report from all three bureaus.

17 What About Other Websites? 17

18 Get a Copy of Your Report! Consumers are entitled to 1 FREE credit report from each bureau every 12 months Or ***Credit Score is not free***

19 My Report Looks Different Not all reports look the same Actually, none of them look like another Layout depends on: Nature of the pull (self-pull, business inquiry) Credit bureau Vendor 19

20 Get a Copy of Your Report! Free reports if adverse action: Denial of credit Housing denial More reasons for a free report: Unemployment Receiving Public assistance Suspecting Fraud

21 What s a Credit Score? A 3-digit number that summarizes the information in your credit report

22 Obtaining Your Credit Score Can buy scores with credit report or separately Free credit score if Free credit score if adverse action

23 FICO Score Computation Length of Credit History 15% Payment History 35% New Credit 10% Type of Credit 10% Amounts Owed 30%

24 Reason Codes Provided with credit scores to indicate factors that affect the score 2-digit code with accompanying description for more details 24

25 Credit Inquiry Hard Pull done when applying for a loan or credit Lowers credit score Soft Pull done when the person or lender inquires about credit history, pre-approvals Credit score stays the same 25

26 Credit Utilization Rate (CUR) Balance = $6,000 Credit Limit = $10,000 Credit Utilization Rate = 60% Balance = $6,000 Credit Limit = $10,000 26

27 Credit Utilization Rate (CUR) Credit Card #1 Credit Card #2 Credit Card #3 Balance $2,000 $2,000 $500 Credit Limit $5,000 $10,000 $500 APR 12% 22% 15% CUR 40% 20% 100% Total CUR = 29% $4,500 Total Balance $15,500 Total Credit Limit 27

28 Credit Utilization Rate (CUR) Credit Card #1 Credit Card #2 Credit Card #3 Balance $2,000 $2,000 $500 Credit Limit $5,000 $10,000 $500 APR 12% 22% 15% CUR 40% 20% 100% Total CUR = 45% $2,500 Total Balance $5,500 Total Credit Limit 28

29 Credit Utilization Rate (CUR) Credit Card #1 Credit Card #2 Credit Card #3 Balance $2,000 $2,000 $500 Credit Limit $5,000 $10,000 $500 APR 12% 22% 15% CUR 40% 20% 100% Total CUR = 27% $4,000 Total Balance $15,000 Total Credit Limit 29

30 What is NOT Included in the Score The Equal Credit Opportunity Act prohibits the following factors from being included in the credit scores: -Race -Religion -Criminal record -Gender -Marital status -Sexual orientation -Bank Account

31 FICO Score Cost of Score APR Monthly Payment % $ % $ % $ % $ % $ % $838

32 Does It Still Matter? 40% -Current to 12 months 30% -13 to 24 months 20% -25 to 36 months 10% -37 or more months

33 What Hurts the Score? Missing payments Late payments (30 days or more) Credit cards maxed out Closing credit cards Numerous inquiries Numerous new accounts Too much credit card debt

34 How Much Does It Cost? Negative Action 680 Score 780 Score Maxed out card -10 to to daylate payment -60 to to -110 Debt Settlement -45 to to -125 Foreclosure -85 to to -160 Bankruptcy -130 to to -240

35 How Long Will It Stay? Bankruptcy Chapter 7 Bankruptcy Chapter 13 Charge offs Collection Inquiries Judgment Paid Tax Lien Paid/Closed Accounts Unpaid Tax Liens 10 years from filing date 7 years from filing date 7 years from original delinquency date 7 years from original delinquency date 2 years 7 years from reported date 7 years from paid date 10 years 15 years (Equifax and TransUnion indefinitely)

36 Improve the Score Pay consistently on-time Don t transfer balances frequently Balance below 30% of your credit limit Limit number of inquiries Pay off credit card debt Always have open, active accounts

37 What About Student Loans? Credit score is not considered for federal student loans No bankruptcy or 90-day delinquency for Federal PLUS loans Student loans are included in credit report and score Forbearance, deferment on credit report

38 Fair Credit Reporting Act Unrestricted access to your report Inaccuracies/outdated information can be disputed Credit bureaus must investigate without a charge Access to your report by others is limited

39 Correcting Inaccuracies About 80% of credit reports have errors 25% of errors are significant Write a letter/dispute online Provide 100-word statement to explain Send all written correspondence via certified mail Keep copies of everything

40 Beware of Credit Repair! Credit repair companies can t legally do anything that you can t do yourself for FREE Accurate information CANNOTbe removed Take the necessary steps to dispute incorrect/outdated information

41 Specialty Credit Reports Checking Accounts Chexsystems, Shared Check Authorization Network, Telecheck Tenant History ChoicePoint, SafeRent Insurance Claim History Medical Info Bureau Prescription History Medpoint, IntelliScript Auto or Homeowner Insurance CLUE or A-Plus Employment Screening -ChoicePoint 41

42 Resources

43 Schedule An Appointment With Us (800) (855) Private, one-on-one counseling 20 offices throughout Philadelphia area

44 Poll After this webinar, I feel more confident that I understand how to read and interpret credit reports Yes No Not Sure info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

45 2014 Webinar Series Understanding the Modern Credit Landscape (April 25) Complying with the Federal Mandate: Requirements & Best Practices (May 22) ( community-understanding-modern-credit-industry) Reviewing & Interpreting Credit Reports (June 26) Disputing Credit Report Errors (July 24) Addressing and Preventing Identity Theft (September 11) 2 hour, 2-part webinar Preparing Youth for a Financially Stable and Successful Future (October 23) All webinars will be 90 minutes long and start at: 11:00 a.m. PST/12:00 p.m. MST/1:00 p.m. CST/2:00 p.m. EST info@creditbuildersalliance.org 2013 Credit Builders Alliance, Inc. Some rights reserved.

46 Contact Us ChildFocus Jennifer Miller Credit Builders Alliance Sarah Chenven Credit Builders Alliance, Inc. Some rights reserved. 46