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Credit Report and Credit Score
Today’s Topics
Credit reports
Credit score components
How to establish positive credit history
Credit card features
Credit card rules
How to manage your card responsibly
Credit Bureaus
Provide information to retailers, financial institutions, insurers, potential employers, and other organizations.
Three Major Credit Bureaus
Equifax Phone: (800) 685-1111 Website: www.equifax.com
Experian Phone: (888) 397-3742 Website: www.experian.com
TransUnion Phone: (800) 888-4213 Website: www.transunion.com
Establishing Credit
Open a checking or savings account at your local financial institution.
Build a relationship with your financial institution to improve your chances of obtaining a credit card or loan.
Name John Doe
Date of Birth January 1, 1989
Social Security Number XXX-XX-XXXX
Current Address 123 Credit Union LaneRaleigh, NC 27609
Account Type Company
Account # Balance Negative Items
Installment SECU XXXXXX $25,000.00
No
Revolving SECU XXXXXX $1,250.00 No
2. Accounts Summary
1.Personal Information
Credit Report Information
Date Company requesting credit record
09/01/2010 Credit Union
10/08/2010 Cell Phone Company
Account Type Company Status Delinquency Description
Revolving Credit Union
Pays as agreed
60 days past due
No
4. Negative Items
3. Inquiries
Credit Report Information
Your Credit Score
A credit score measures the probability a borrower will make late payments within the next two years.
Example of a scoring system: Equifax 300-850 Experian 330-830 TransUnion 150-934
The higher your score, the less risk you represent to lenders and the more favorable they’ll view your application.
Your Credit Score
Most financial institutions utilize credit scoring for a loan qualification and rate pricing.
At SECU, your credit score alone does not determine your credit worthiness, as the Credit Union will look at several factors for qualification. Additionally, SECU does not utilize a tiered rating system for credit scoring.
Your Credit Score Can Help You
Receive better credit offers
Obtain lower interest rates
Acquire quicker credit approvals
Negative Information
Accurate negative information- 7 years
Bankruptcy information- 10 years
Criminal convictions- no time limit
Default information on government insured or guaranteed student loans- 7 years after guarantor actions
Unpaid judgment- 7 years
Improving Your Credit Report
Contact the consumer reporting company and creditor in writing for disputes.
Pay your bills on time.
Catch up on missed payments immediately and avoid future late payments.
Improving Your Credit Score
Keep your credit card balances low.
Note: Paying off a collection account or closing an account with a missed payment will not remove it from your report. This type of information may remain on your report for 7 years.
Your Free Credit Report
Web: www.annualcreditreport.com Toll Free Number: 1-877-322-8228
Annual Credit Report Request ServiceP.O. Box 105281Atlanta, GA 30348-5281
Features of a Credit Card
Annual percentage rate (APR)
Annual fee
Credit limit
Grace period
Other fees
Information provided by www.balancepro.net
Did You Know?
There is no defined payoff date- credit card payments could go on forever.
Monthly minimum payments vary, and is based on your balance.
Credit cards usually have higher interest rates than most types of credit.
The least-favorable type of debt is called consumer debt, which is debt for items that won’t increase in value over time.
$25 purchase at grocery store
Card is approved & consumer signs receipt
Grocery Store deposits receipt to their financial institution
Financial Institution sends transaction electronically to VISA
Financial Institution bills member for purchase
Credit Card Payment Process
VISA processes transaction: credits merchant account and debits the financial institution account since the financial institution is the card issuer.
Member pays credit card bill
Credit Card: Advantages
Purchase items now
Safer than carrying cash
Record of purchases (statement)
Convenient
Credit Card: Disadvantages
InterestFees Risk of increased debtMay have difficulty repaying if
you have a high balance
Credit Card Rules!
Your credit card company must notify you: When they increase your rate or change certain fees
When they make significant changes in terms of your card
Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”
Credit Card Rules!
No interest rate increases for first year
Increased rates apply to new charges only
Restrictions on over-the-limit transactions:
You must opt-in to allow transactions that take you over your credit limit
Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”
Credit Card Rules!
Underage consumers protection If under 21, you must prove that you can
make payments or you need a cosigner to open a credit card.
For more information visit the Federal Reserve’s website http://www.federalreserve.gov/creditcard
Information provided by the Federal Reserve “What You Need To Know: New Credit Card Rules”
What Are Your Responsibilities?
Read and understand the terms/conditions
Pay your debt on time Contact your creditor if you are
unable to make a payment
Report your card if it is lost or stolen, immediately.
Protect your card - don’t give your card information to anyone over the phone unless you initiated the call and know with whom you are speaking.
What Are Your Responsibilities?
Bottom Line…
Always pay more than the minimum on your credit card or you may find you are only paying towards the interest every month.
Be cautious when making purchases on your credit card, only charge what you can immediately pay off.