1. Credit Reports: Our Students and What They Need to Know. Presented by Renee Gullotto, EdFund and Sun Ow, Great Lakes Higher Education 1

2. What well learn today Whats on a credit report What is a credit score based on How to clean up credit Identity Theft Credit Card Law Changes and Public Law 111-24 How to entice your students to attend a credit workshop 2

3. Understanding Credit What is a credit report? Checking your credit report Whats in a credit score? Credit risk Benefits of good credit 3

4. What is a Credit Report? History of your ability to manage credit Similar to a transcript Lenders report your: Payment history Amount borrowed Credit limits Delinquencies 4

5. Whats in Your Credit Report? Summary of key information Personal information Credit history Public records Inquiries 5

6. Checking Your Credit Report 79% of credit reports have errors 1 Check report annually – Name – Address – Birth date – Social Security number – Accuracy of accounts 6 1 National Association of State Public Interest Research Groups, 2004 Survey

7. Credit Report Information Information that is included: Identifying info: your name (nickname), current & previous addresses, phone #, ss #, date of birth, current & previous employers Specific info about each credit account: date opened, credit limit/loan amount, monthly payment & payment pattern Public records: federal district bankruptcy, state & county tax liens, monetary judgments Credit inquiries: names of people/companies requesting your credit history Statements of dispute: added only after official consumer dispute is filed, investigated, and agreement between consumer & credit grantor cannot be reached

8. Credit Reporting Agencies 3 Major Credit Reporting Agencies: Equifax 800-685-1111 www.equifax.com Experian 888-397-3742 www.experian.com TransUnion 800-888-4213 www.transunion.com Call, write, or access your report online Fees range from free (if youve been denied credit within last 60 days or live in certain states) Monitor report regularly for accuracy www.annualcreditreport.com

9. Credit Report Purpose Provides a history of your credit use to current and prospective lenders Allows lenders to assess risk of extending credit or lending money to you Used for all forms of credit, including private student loans, apartment rental, etc.

10. Credit Report Information Information that is excluded: Race Religious preference Personal lifestyle Political preference Medical history Friends Criminal record Any other unrelated information

11. What is a Credit Score? Summary of credit report info represented as single number, based on mathematical calculation Predicts future payment performance (risk to lender) FICO (Fair, Isaac & Co.) most common score type FICOs range from 300 to 850; the higher the better No single cut-off score used by all lenders Scores are fluid - recalculated each inquiry Not physically stored on credit report, but may be requested with report Resource: www.myfico.com

12. What is a Credit Score? Summary of credit report info represented as single number, based on mathematical calculation Predicts future payment performance (risk to lender) FICO (Fair, Isaac & Co.) most common score type FICOs range from 300 to 850; the higher the better No single cut-off score used by all lenders Scores are fluid - recalculated each inquiry Not physically stored on credit report, but may be requested with report Resource: www.myfico.com

13. The purpose of a Credit Score Probability of paying new loan Grades of loans A: the most creditworthy borrower B: the average borrower Subprime: highest risk borrower More information www.myfico.com 13

14. What Determines Your Score? 14 Source: www.Myfico.com

15. Credit Score Distribution 15 Source: www.Myfico.com

16. Score = Indicator of Risk 16 Source: www.Myfico.com Credit Score

17. Buying a Car 17 Source: www.Myfico.com

18. Buying a House 18 Source: www.Myfico.com

19. Securing Good Credit Pay bills on time Pay before due date Automatic payments Pay down outstanding balances Check credit report periodically Protect your identity 19

20. Low Credit Risk Stable class schedules Steady employment Consistent payments On-time loan payments Responsible student loan management 20

21. High Credit Risk Late payments High balances Unpaid accounts Excessive number of open accounts Many recently opened accounts 21

22. Charging $100 a Week End of PeriodBalance Minimum Payment 1 st month$400$12 1 year$4,713$146 5 years$2,232$69 10 years$877$21 19 years$7 Payments based on 3 percent minimum payment. Interest rate is 18 percent. No additional charges made in years 2-19

23. The Benefits of Good Credit Establish and build good credit history More apartment/house choices Open a checking account Better job opportunities Fast loan decisions Increased purchasing power Little or no money down on cars Lower interest rate Save money 23

24. Credit Repair You cannot repair poor credit - derogatory credit remains on your report for up to 10 years - avoid paying for credit repair services that guarantee to fix poor credit You can correct inaccurate information - dispute incorrect credit information - update personal information You can improve credit behavior - pay off credit cards in full monthly - make payments on time - dont have too many open lines of credit

25. Feeling the Crunch? Contact creditors Create a spending plan Limit credit card use Opt out of pre-approved offers 888.5OPTOUT (888.567.8688) Ask for a free credit report 877.322.8228 www.annualcreditreport.com 25

26. Getting your Free Credit Report www.annualcreditreport.com 877.322.8228 One free report from Equifax TransUnion Experian All three at once or one every four months 26

27. How to Report Fraud File a police report. Contact your creditors or bank immediately to close accounts. Keep a record of all calls. Each Credit Bureau offers a service that will notify you whenever a new credit card is opened in your name. Contact Federal Trade Commission (877)438-4338

28. Preventing Credit Fraud Sign new credit cards immediately Store credit cards in secure place Limit # of cards you carry Do not write PIN on your cards Do not print SSN on checks Shred any mail with your account # before throwing away Notify card issuers immediately if billing statement is incorrect or if you dont receive your statement Monitor your credit report regularly

29. Other tips Use USPS mailbox & not home mailbox to send letters Stop mail when on vacation Request special delivery for check orders Keep your purse or wallet in a secure place Carry limited # cards and checkbook with you Place a fraud alert if you suspect something

30. Keys to Using Credit Successfully Identify your spending habits Understand the fine print Manage credit wisely Have only one card Pay balance in full each month Ask for help at the first sign of trouble

31. The Credit Card Accountability Responsibility and Disclosure Act of 2009 Signed into law on May 22, 2009 Amends the Truth in Lending Act and Covers: Protection of Credit Card Holders Limits on Fees and Interest Charges Application of Credit Card payments Rules Regarding Monthly Statements Consideration of Ability to Repay Late Payment Deadlines and Penalties Protection of Young Consumers Credit Cards and College Students Prepaid Cards, Gift Certificates and Gift Cards 31

32. Protection of Credit Card Holders Written notice of increase in APR, fees and finance charges 45 days prior to change. Notice of Right to Cancel in clear & concise manner. Closure/cancellation of account by consumer shall not constitute a default and will not trigger an obligation to pay in account in full. Limits on Interest Rate, Fee and Finance charge increases on outstanding balances. Interest Rate Reduction- specific rules that must be considered before creditor reduces rates. TILA Sections 127, 171 32

33. Protection of Credit Card Holders Annual rate, fee or finance charge may not be increased for the first year Promotional annual rate may not be increased for at least 6 mos. from the beginning date the promo rate takes effect. TILA Sec.172 33

34. Limits on Fees and Interest Charges Opt-in is required for Over-The-Limit Tranactions if fees are imposed. Consumer must be informed of the fee amount. Customer has to elect that their credit line be extended to cover in excess of credit limit. Customer must be notified of the right to revoke their election. Amount of fees must be reasonable- late fees, over the limit fees and penalty fees/charges TILA Sec. 127 34

35. Application of Credit Card Payments Payments in excess of the minimum payment are to be applied to the card balance with the highest interest. If card issuer makes a change that causes a delay in crediting a payment over a 60 day period, no late fee or finance charge may be applied. TILA Sec. 164 35

36. Rules Regarding Statements Payment date must be the same each month If the payment due date is a day the creditor does not receive or accept payments, the creditor may not treat a payment received on the next business day late for any purposes. TILA 127 36

37. Consideration of Ability to Repay A card issuer must consider the consumers ability to make required payments under the terms of the account prior to: Opening an account Increasing the credit limit on an account. TILA Sec 150 37

38. Payoff Timing Disclosures The billing statement must have the following information in a prominent location: A statement that making only the minimum will increase the interest you pay. The number of months to pay the entire balance Total cost to consumer, including interest and principal payments. Monthly payment amount required to eliminate the balance within 36 mos. A toll free number to obtain credit counseling. TILA Sec 127 (b)(11) 38

39. Requirements on Late Payment Deadlines and Penalties Late payment deadline is required to be disclosed in conspicuous location and must include: The date payment is due The date the late fee is charged Amount of late fee. The statement If one or more late payments on a credit card account may result in an increase in interest rate. TILA 127 (b)(12) 39

40. Requirements on Late Payment Deadlines and Penalties Brick and Mortar: If the creditor maintains branches or offices that accepts payments, the date the payment is made must be used for determining whether a late fee or penalty may be imposed. TILA 127(b)(12) 40

41. Extensions of Credit to Underage Consumers Credit cards may not be issued to, accounts opened by or on behalf of a consumer under the age of 21 unless a written application that meets application requirements is obtained. Application Requirements for consumers under 21 shall require: A co-signer indicating joint liability until the consumer turns 21. The consumer to submit financial information showing a means to repay obligation. TILA 127(C) 41

42. Issuance of Credit Cards to Certain College Students No credit increase may be made to accounts that have a co-signer due to the consumer being under the age of 21 unless: The co-signer approves the increase in writing Assumes joint liability for the increase TILA Sec 127(p) 42

43. Privacy Protection for College Students An institution of higher education must publicly disclose any contract for the purpose of marketing a credit card. Card issuer or creditors may not offer tangible items as an inducement to students to apply for credit card offers if the offer Is on campus Near the campus or At an event sponsored or related to campus TILA 140 43

44. Privacy Protection for College Students Congress believes colleges should consider adopting the following policies: Card issuers that market credit cards on campus should notify the institution of the location the marketing will take place. The number of locations that marketing of credit cards takes place should be limited. Credit card and debt education/counseling sessions should be offered as a regular part of any orientation program for new students. TILA 140 44

45. General Use Prepaid Cards, Gift Certificates and Store Gift Cards It is unlawful to sell or issue a gift certificate, store gift card, or general use prepaid card that has an expiration date unless: Expiration date is at least 5 years from the date the certificate was issued. Card funds were last loaded to a store gift card or general-use prepaid card and Terms of expiration are clearly stated. *Credit Card Act Overview and information obtained on EDFUND.org 45

46. How to Get the Students To Attend Credit Workshops- Ideas… 46

47. Thanks for coming! 47