© 2011 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Give me a little credit

© 2011 Experian Information Solutions, Inc. All rights reserved. 2 Credit It is a privilege you earn The choice is yours

© 2011 Experian Information Solutions, Inc. All rights reserved. 3 What is credit?  Credit is using services or making purchases of things you need when you need them, and then paying at an agreed upon time under agreed upon terms  Common types include credit cards, mortgages and car loans  Service contracts, such as cable and telephone, can also be considered credit  Financial trustworthiness ► Your credit record is one of the most important factors lenders consider when you apply for credit

© 2011 Experian Information Solutions, Inc. All rights reserved. 4 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

© 2011 Experian Information Solutions, Inc. All rights reserved. 5 The credit cycle You pay lender Credit reporting companies share with new lenders Lender updates records Lender shares history with credit reporting companies

© 2011 Experian Information Solutions, Inc. All rights reserved. 6 Credit reporting companies are like libraries Credit reporting company clients check out information … … If they have a permissible purpose under the law

© 2011 Experian Information Solutions, Inc. All rights reserved. 7 Defining credit reports and their importance What is a credit report? ► Your personal credit report includes a record of your financial accounts and obligations and the identification information associated with them ► This report is sometimes called a credit file or a credit history ► Credit reporting companies collect and organize data about your credit history from your creditor's and public records

© 2011 Experian Information Solutions, Inc. All rights reserved. 8 Defining credit reports and their importance Why is it important? ► Your credit report serves as your financial references to companies with whom you want to do business ► Lenders use credit reports and credit scores to gauge the likelihood that you will pay back a loan ● A strong credit history enables you to obtain a credit card, home and auto loans and many other valuable credit services, and can affect the amount that you pay for those services ► Reports are also used in other non-lending situations – employment checks, apartment rental applications, etc.

© 2011 Experian Information Solutions, Inc. All rights reserved. 9 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  Disclosure to consumer

© 2011 Experian Information Solutions, Inc. All rights reserved. 10 The players in the credit cycle You Credit reporting companies Lenders Risk score modelers The government

© 2011 Experian Information Solutions, Inc. All rights reserved. 11 What’s in a credit report?  Identifying information  Account information  Public record information  Inquiries  Dispute instructions

© 2011 Experian Information Solutions, Inc. All rights reserved. 12 Information comes from you Information you provide in an application for credit, housing, or insurance is reported to credit reporting companies

© 2011 Experian Information Solutions, Inc. All rights reserved. 13 How long is information kept on a report? Open accounts in good standingIndefinitely Closed accounts in good standing10 years Late or missed payments7 years Collection accounts7 years Civil judgments7 years Chapter 7 bankruptcy10 years Chapter 13 bankruptcy7 years Unpaid tax liens10 years Paid tax liens7 years Credit inquiries2 years

© 2011 Experian Information Solutions, Inc. All rights reserved. 14 What’s NOT in a credit report?  Credit reporting companies do not store: ► Criminal background ► Medical information ► Buying habits / transaction data ► Bank account information ► Credit scores

© 2011 Experian Information Solutions, Inc. All rights reserved. 15 Common myths about credit reporting When paid, the bad debt will go away The credit reporting company denied me credit I’m not responsible for those charges on our account A divorce decree separates joint accounts Consumers must give their permission for a report to be issued Requesting your own report and preapproved offers harm your credit history There is only one credit score and it is on every report

© 2011 Experian Information Solutions, Inc. All rights reserved. 16 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

© 2011 Experian Information Solutions, Inc. All rights reserved. 17 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 usually included in or described in an adverse action notice  Experian provides both positive and negative factors to consumers with scores it provides through its direct-to-consumer services

© 2011 Experian Information Solutions, Inc. All rights reserved. 18 VantageScore SM Payment historyRepayment behavior (satisfactory, delinquency, derogatory) UtilizationPercentage of credit amount used/owed on accounts BalancesAmount of recently reported balances (current and delinquent) Depth of creditLength of credit history and types of credit Recent creditNumber of recently opened credit accounts and credit inquiries Available creditAmount of credit available Focus on these factors! 32% 23% 15% 13% 10% 7%

© 2011 Experian Information Solutions, Inc. All rights reserved. 19 Ten rules for managing credit 1.Establish a credit report 2.Always pay as agreed 3.Get a credit card 4.Use caution in closing accounts 5.Apply for credit judiciously 6.Time is key 7.Demonstrate stability 8.Have a plan 9.Put credit to work for you 10.Share your knowledge

© 2011 Experian Information Solutions, Inc. All rights reserved. 20 Centralized source for free reports  One every twelve months  Single contact point ► Telephone – ► Mail ► Internet  Fee for credit score disclosure

© 2011 Experian Information Solutions, Inc. All rights reserved. 21 Resources  Free annual FACT Act credit report   Access to free report from each of the three credit reporting companies  Experian  credit education credit education  Ask Max advice column, sample consumer report, frequently asked questions  Experian Credit Educator: Experian Credit Educator  Personalized review and guidance about your credit report and score by an Experian professional for a nominal fee.   Access to credit monitoring and unlimited Experian credit reports and scores   Purchase a scored report and learn about scores   Free online service for consumers to compare low rates on monthly bills and reduce the cost of living   Free online comparison shopping service to help consumers find lowest prices for goods and services   Assistance in locating college education resources   Vehicle history reports to help consumers ensure they make good pre- owned auto purchasing decisions  Education partners ► ►

© 2011 Experian Information Solutions, Inc. All rights reserved. 22 Test your knowledge What history does your credit report contain? Student loans Car loans Credit cards All of the above 

© 2011 Experian Information Solutions, Inc. All rights reserved. 23 Test your knowledge What is likely to happen to your credit score when you pay your bills on time and / or reduce your credit card balance? Gets better Gets worse Stays the same 

© 2011 Experian Information Solutions, Inc. All rights reserved. 24 Test your knowledge You are entitled to a free copy of your credit report... Once a day Once a month Once a year Once a lifetime 

© 2011 Experian Information Solutions, Inc. All rights reserved. 25 Test your knowledge Which organizations maintain consumer credit records? Equifax Experian TransUnion All of the above 

© 2011 Experian Information Solutions, Inc. All rights reserved. 26 Test your knowledge Missed payments will remain in your credit history... Up to seven years Up to ten years Until they are paid Forever 

© 2011 Experian Information Solutions, Inc. All rights reserved.