Understanding Credit Reports 1 2017 How is it

Transcript:Understanding Credit Reports 1 2017 How is it:
Understanding Credit Reports 1 2017 How is it determined? How to read a credit report? How to build and maintain credit? 2 Understanding Credit Reports What is a credit report? A credit report is simply a file that is created by the bureaus when you make a payment on loans, credit cards, student loans or other debt related items. The company that gave a customer the tradeline keeps a record of how the individual pays on the debt. This information is sent to one or all of the bureaus. The bureaus then compile the information and create a credit score. Rev 12/17 Before we jump into all things credit report related, it is important for us to know a few key terms. Terms Credit Score, Beacon, and FICO (Fair, Isaac & Co) Tradeline Open-End Credit or Revolving Line of Credit A good way to get credit started – secured credit card Closed-End Credit or Installment Delinquency – 30, 60, 90, 120, 180 Charge-offs Collections 3 Understanding Credit Reports Rev 12/17 4 Understanding Credit Reports Terms (cont.) Public Records Bankruptcy Tax Lien Civil Judgements Rev 12/17 There are 3 main credit bureaus, also known as agencies, that receive information from creditors regarding the history of different loans, credit cards, and other debt related items. Equifax – We use this bureau when pulling credit reports for accounts and consumer loan applications. TransUnion Experian www.annualcreditreport.com Pull your credit and review! 5 Understanding Credit Reports Rev 12/17 What is a credit score? A credit score is a mathematical equation that takes several pieces of credit information and creates a score based off of how likely a consumer is to pay their debts in the future. FICO credit scoring uses a range of 300-850. 6 Understanding Credit Reports Rev 12/17 7 Understanding Credit Reports Rev 12/17 What credit information is used to calculate the score? Payment History – How has the consumer paid on the debt Amounts Owed – How much does the consumer owe on their debt Length of Credit History – How long have the tradelines been open New Credit – How much debt have they been applying/approved for recently Types of Credit Used – Revolving vs. Installment Revolving balances vs. available line Are the scores the same between the 3 bureaus? No Each bureau uses its own formula to create a score for each consumer. These differences in formulas lead to potentially