Your parents can’t fix everything How to rescue your credit —before it needs saving!

Begins when you choose and use credit services Your credit history Begins when you choose and use credit services Influences your ability to obtain products and services—and how much they’ll cost you Credit cards Car loans/leases Private student loans Mortgages, leases Employment

Your credit history matters! A good credit history will help you access services to improve your quality of life A bad credit history will hold you back–and your missteps will follow you for as long as 10 years

How it works Three credit reporting companies update and distribute consumers’ information: Equifax, Experian and TransUnion Consumer applies for credit Creditor requests information about consumer’s financial history Credit profile used to determine whether to authorize credit—and if so, at what interest rates Consumer is granted (or denied) credit Credit grantor reports activities back to credit reporting companies every 30 days Credit reporting companies update consumer’s information

2 4 1 3 5 What is a credit report? Prepared by Lists the type of credit a consumer uses, the length of time the accounts have been open, and whether the consumer has paid their bills on time Prepared by credit reporting companies for use by credit grantors and other parties with permissible purpose Tells lenders how much credit a consumer has used and whether they are seeking new sources Summary of a consumer’s financial reliability Details a consumer’s credit history as it has been reported 1 3 5

Types of credit reports Lists all inquiries including limited inquiries and account reviews Only consumers can request this version Consumer disclosure (Consumer version) Subscriber report (Credit grantor version) Abbreviated version of consumer credit report that creditors see Does NOT contain limited inquiries or account reviews Contains credit inquires

Elements of a credit report What is in a credit report? What is NOT in a credit report? Identifying information Credit history Inquiries Race Gender Religion Sexual orientation National origin Medical history Checking or savings account balances Income Driving record Report card

How can you get a copy of your credit report? You get one free report every 12 months from each of the three bureaus! Visit AnnualCreditReport.com to download You can also get free reports at CreditKarma.com

What is a credit score? Sum calculated by vendor and used by lenders as an indicator of how likely consumer is to repay loans Snapshot in time of the consumer’s current financial situation Generated by a mathematical formula Each credit grantor has its own strategy for interpreting the credit score If credit is denied after reviewing the score, credit grantors must disclose reasons for the decision

What’s in a credit score? What’s calculated in a credit score? What is NOT calculated in a credit score? Payment history Outstanding debt Credit account history Recent inquiries Types of credit used Demographic information Age, race, religion, national origin, gender, sexual orientation, marital status, residence, child/family support obligations Employment information Salary, occupation, title Other credit information Interest rates charged by other credit grantors, usage of a credit counseling company

What are the Five Parts that go into a Typical Score What are the Five Parts that go into a Typical Score? What Percent for each part? New credit: 10% # of recently opened accounts # of recent inquiries Payment history: 35% Account payment information Adverse public records Amount of delinquent accounts Number of past due items Credit history length: 15% Time since accounts opened Accounts owed: 30% Outstanding balances on accounts Proportions of balances to total credit limits Proportion of installment loan amounts Types of credit used: 10% # of various types of accounts

What’s a good credit score? Very poor Poor Fair Very good Good Typically the higher the score the better Individual credit grantors decide range of acceptability For example, a consumer’s credit score might be 680 Based on this particular model, here is how the consumer may be viewed by a certain lender 300 900 400 500 600 700 800 You are here

Credit management tips The single most important component of your credit score is whether you make payments on time Your parents can make a payment for you. Your parents cannot make a late payment not late. A late payment stays on your credit history and impacts your credit score for as long as 7 years. However, the impact lessens as time passes.

More credit management tips Set goals Clean up your records Check your credit report every three months Improve your credit score 50 points or to above 650 Reduce your debt balances to below 35% of available credit limit Create a budget and stick to it Dispute negative inaccuracies on your credit report Remove expired debts and collection accounts Consider refinancing Guard against identity theft

Top 5 misconceptions Your credit score will drop if you check your credit report 1 Closing old accounts will improve your credit score 2 Once you pay off a negative record, it is removed from your credit report 3 Being a co-signer doesn’t make you responsible for the account 4 Paying off a debt will add 50 points to your credit score 5

If you find a mistake… First, correctly identify inaccurate information Next, contact the credit grantor responsible for the inaccuracy and try to resolve the issue If this does not work, contact the credit reporting company(s) reporting the inaccurate information Credit reporting company(s) will investigate the issue At the conclusion of the investigation, or within 30 days, you’ll be contacted You have the right to dispute inaccurate information on your credit report

What questions do you have?

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