Unit 4 Consumer Credit Part 5 Credit Reports Dollars and Sense.
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Transcript of Unit 4 Consumer Credit Part 5 Credit Reports Dollars and Sense.
Unit 4 Consumer CreditPart 5 Credit Reports
Dollars and Sense
What does Your Credit Report Contain
Identification-Name, address-Social Security Number-Current and Previous employers
Credit Information-Credit accounts with Financial institutions,retailers, credit card issuers, other lenders-Credit limits, account balance, payment patternover the last two years
What does Your Credit Report
Contain Public record information
-Bankruptcies-Judgments-Tax liens
Inquiries-Credit Grantors-Potential employers
Credit Score (if requested)
What is not in your Report
Race or religion
National origin
Sex and Marital status
Whether you receive public assistance
Criminal activity
Why do you think that is?
What is your credit score?
A credit score is a number which represents an estimate of an individual’s financial creditworthiness
Five Parts to your FICO credit scores
35% of Score - Payment history
30% of Score – How much you owe
15% of Score – Length of Credit History
10% of Score – New Credit
10% of Score – Other factors (mix)
http://www.adjustcredit.com/fico-credit-scores-ranges-meanings/
Upon the application of this formula a specific credit score is derived. The following credit score range chart will help you to interpret the credit score:
The advantage of having a good credit score range is that the interest rates that will be levied on your credit and loans would be reasonable and very convenient. Having a score in the excellent credit score range will give you the best possible offers and least possible interest rate.
Credit Score Range
Score Rating
800 + Excellent
700 to 799 Very Good
680 to 699 Good
620 to 679 OK
580 to 619 Poor
500 to 579 Bad
499 & lower Very Bad
Why Credit Scores are important
Helps lenders predict how likely you are to make credit payments on time
Affect whether you can get credit
What you pay for credit cards, auto loans, mortgages, and other types of credit
Higher scores more likely to be approved and pay a lower interest rate
About Credit Scores - Many types of credit scores
Lenders usually mean FICO score developed by Fair Isaac Corporation
Most commonly used scoring system
Scores range from 300 – 850
Most people score in the 600s and 700s
Myths about Credit Scores Close unused credit cards – False
Your credit report merges when you marry – False
FICO Scores are based on income – False
Checking your score hurts your score - False
Why Scores go Down: Pay late or pay less than required
payment
Public Record items appear Bankruptcy, Judgments
Credit balances go up a lot
Open new accounts
What makes scores go up: Pay bills on time
Pay down credit card balances
Keep older accounts open
Avoid opening new ones
Apply for new credit only when you need it
Make sure your credit report is accurate
Improving your Score will…
Lower your interest rates
Speed up credit approvals
Get better credit card, auto, mortgage offers
Key Points: Get a copy of your credit report annually
Every 12 months – free copy of credit report from three major reporting agencies
www.annualcreditreport.com or 1-877-322-8228
Correct any errors or inaccuracies
Establish good credit habits
3 Major Credit Reporting Agencies
Experian Web: www.experian.com Phone: 1-800-200-6020
Equifax Web: www.equifax.com Phone: 1-866-685-1111
Transunion Web:
www.transunion.com Phone 1-800-888-4213
Credit Reporting Agency
FICO Score
EquifaxBEACON®
Score
ExperianExperian/Fair
Isaac Risk Model
TransUnion EMPIRICA®
Español
TransUnion Credit Report
Equifax Credit Report
Your Task Complete the Credit Scores Worksheet