Give me a little credit
What you need to know to put your
Credit report basics
What a credit report is, where it
comes from and how it works
The three national credit reporting companies
Credit reporting companies serve
consumers and businesses
by making possible:
►
Instant credit
►
Lower-cost credit
►
Nationwide credit
►
Widespread availability
►
Account management
The credit cycle
You pay lender
Credit
reporting
companies
share
with new
lenders
Lender
updates
records
Lender shares history with
credit reporting companies
The players in the credit cycle
You
Credit
reporting
companies
Lenders
Risk score
modelers
The
government
Fact or Fiction
Credit reporting companies decide
whether a an application should
be approved or declined.
Credit reporting companies are like libraries
Credit reporting company clients check out information …
The Fair Credit Reporting Act
Permissible purposes
Open or manage credit accounts
Offers of credit
Employment purposes
Underwrite insurance
A business transaction initiated by the consumer
Court order or federal jury subpoena
Valuation of risk of an investor
Eligibility for government license
What’s in a credit report?
Identifying information
Account information
Public record information
Inquiries
Initiating a dispute
Recommend getting a report directly from Experian but no longer required
►
Toll-free number on report gives you access
to customer service
►
Report number identifies you and your record
►
You and customer service representative
will be looking at the same information
in the same order
Dispute online, by telephone or by mail
►
www.experian.com/dispute
Upload all supporting documents for your dispute:
►
www.experian.com/upload
Processing a dispute
Credit reporting company verifies with the source of the information (creditor or
court)
Must allow up to 45 days for processing
Source verifies, corrects or updates
Secure, encrypted electronic system is used
Creditors required to report corrections
to all databases
Consumer can add statement of dispute
if issue is not resolved with source
Fact or Fiction
Paying a collection account will
reset the 7 year deletion period.
How long is information kept on a report?
Open accounts in good standing
Indefinitely
Closed accounts in good standing
10 years
Late or missed payments
7 years
Collection accounts
7 years
Civil judgments
7 years
Chapter 7 bankruptcy
10 years
Chapter 13 bankruptcy
7 years
Unpaid tax liens
10 years
Paid tax liens
7 years
What’s NOT in a credit report?
Credit reporting companies do not store:
►
Criminal background
►
Medical information
►
Buying habits / transaction data
►
Assets and bank account information
►
Credit scores
Credit rehabilitation
and maintenance
Rebuilding your credit report and keeping
it in shape to get the credit you need
Fact or Fiction
Paying rent on time can help
you build a good credit history.
Renters
31%
Owners
69%
Rental payment history data
What is it?
Why is it important?
On-time as well as late payments
Bad checks and/or insufficient funds (NSF)
Unfulfilled lease terms
Outstanding balances/write-offs
Previous collections activity
96 million of 300 million U.S. residents rent
Rental payments not previously on credit report
64 million U.S. consumers insufficient/no credit history
Consumers rejected with good payment history
Rental data
Increases scoreable population
Rental payment information improves scores for existing consumers and helps score
previously unscoreable consumers
No hit
22%
Thin file
10%
Unscorable
32%
Scorable
68%
RentBureau
®
consumers
0
10
20
30
40
50
60
No act. 24
600-699
700-799
P
er
c
en
t
New Consumers
87% of new consumers
are scoreable
CBA Reporter, Business Reporter,
and Access Overview
Why Credit Building?
Increases Access & Options
Where we live
How we store & manage
our money
How we get around
What and how
much we pay for credit
The cost of
household/
Why Credit Building?
To create innovative solutions for asset building
organizations helping low- and modest income
households build credit and financial access.
Good Credit is an Asset
Mission driven nonprofits and other entities are
uniquely positioned to help the households they
serve build credit
as an asset
– often the
FOUNDATIONAL asset.
Introduction:
Who is Credit Builders
Alliance?
Credit Repair = fixing negative history
Credit Counseling = dealing with current crisis
Credit Building
= creating
opportunities for
the future
Good Credit is an Asset
What is Credit
Building?
From CBA Members:
Product Models of Success
Credit
Builder
Products
can serve
many
different
people
and
purposes.
CBA’s Credit Builder
Platform
CBA
Business
Reporter
CBA
Access
CBA Rent
Reporter
CBA
Reporter
Reported to consumer and business credit
bureaus every month by over 160 members
Credit scores
What you need to know
to have winning numbers
0 is a perfect credit score.
Fact or Fiction
What is a credit score?
Used instead of a manual “score sheet”
Valuable risk management tool
Many different models, with many different scales available from many
different sources
Credit reporting companies often apply the model selected by the creditor when
delivering the credit report; however, the credit scoring model, or formula, is
proprietary to the developer and is not known by the credit reporting company
780
513
657
824
When you request your free annual credit report:
www.annualcreditreport.com
From the websites of the national credit reporting companies and risk score
modelers
From online education sites
From your lender if you have had adverse action taken or not received the best
terms available
Fact or Fiction
Paying a collection account will
immediately improve credit scores.
FICTION
Risk factors are the key
Generated when a risk score is calculated
Tell the consumer what to address in their
credit history to become more creditworthy
Are largely consistent from model to model
Are included in or described
in an adverse action notice
Experian provides risk factors to consumers
with the scores it provides through its
VantageScore
®
Payment History, 40%
Balances, 11%
Depth of Credit, 21%
Recent Credit, 5%
Available
Credit, 3%
Portrait of a Credit Rockstar
What do people with the best credit scores look like?
• Surveyed five categories of consumers: Super Prime – Deep Subprime
• VantageScore 3.0
• Six key credit score components
• Age of accounts
• Number of accounts
• Revolving account balances
• Utilization
• Inquiries
• Delinquency
It never pays to be late
Super
Prime
781-850
Prime
661-780
Nonprime
601-660
Subprime
500-600
Deep
Subprime
300-499
Delinquency
None (%)
100
97
85
62
18
60 days (%)
0
2
13
35
78
Most recent*
42
29
20
16
3
*in months
Don’t push the limit
Super
Prime
781-850
Prime
661-780
Nonprime
601-660
Subprime
500-600
Deep
Subprime
300-499
Utilization
Revolving Util. (%)
8
30
59
73
99
Installment (%)*
39
30
24
19
6
Automated risk scores:
There is no silver bullet
Time is the key.
You can’t “fix” the number.
Centralized source for free reports
www.annualcreditreport.com
One every twelve months
Single contact point
►
Telephone - 877 322 8228
►
►
Internet
Experian Education Resources – On the Web
Free annual FACT Act credit report
►
www.annualcreditreport.com
Access to free report from each of the three credit
reporting companies
Experian
►
www.experian.com/education
Ask Experian advice column, sample consumer
report, frequently asked questions
►
www.livecreditsmart.com
Credit trends and information to inspire consumers to
use credit wisely
►
www.experian.com/consumer-education-content
Electronic versions of our published materials,
sample credit report, videos, PowerPoint
