1. Chapter 3 What You Need to Know about Your Credit Report Identity Theft

2. The Truth about Credit Reports What is a credit report? Your credit report is a record of how you have borrowed and repaid debts. How do credit Bureaus collect information? Creditors transmit information about the status of their consumer accounts to the credit bureau on a regular basis. (Some creditors only report to the credit bureaus if you are in default)

3. Reviewing Your Credit Report Order Your Report. Order all 3 reports, because each bureau calculates your credit differently Free Annual Credit Report. You can get your free credit reports from the centralized service by going to: www.annualcreditreport.com or call: 877-322- 8228 www.annualcreditreport.com Other ways to get a free credit report (See p. 43) Paying for a Credit Report. If you’ve already accessed your free annual report and the other special circumstances discussed above don’t apply, credit bureaus can currently charge you no more than $11.50 per report.

4. Credit Scoring Improving Your Credit Score. The best way to improve your credit score is to pay your bills on time and keep low balances. Shopping for Credit and Your Score. You may also have heard that a large number of credit inquiries will lower your credit score. This is not true. Getting Your Score. Under federal law (Fair Credit Reporting Act), the credit bureaus are required to provide consumers with their credit scores upon request. Mortgage lenders are also required to give you information about your credit score for free.

5. Coping with a Bad Credit Report 1)Correct any errors on your report 2)Clean up your file with the help of the creditor 3)Use your federal right to remove student loan default 4)Clean up public record information 5)Delete old information 6)Explain damaging items 7)Avoid overreacting to threats to damage your credit rating 8)Avoid credit repair agencies

6. Coping with a Bad Credit Report Who can see your credit report? Creditor. Employers. Government agencies. Insurance companies. Landlords. Your bad credit report is not a big problem with utility services, student loans, medical bills, etc.

7. Coping with a Bad Credit Report When is a bad credit report less important? Utility services. Student loans and grants. Medical bills Your credit report will not damage your friends, relations, and need not even affect your spouses. Your credit report will not damage your reputation in the community. Your bad credit report is not a big problem with utility services; student loans; medical bills, etc.

8. Re-establish a Good Credit Rating 1.Stabilize Your Situation In the long run, the most important thing for you to do in order to reestablish a good credit rating is stabilize your employment, income, and debts. 2.Establish new credit accounts (with caution). You can improve your credit by getting new credit and paying it back on time.

9. Re-establish a Good Credit Rating 3. Build credit in your own name If you had a joint account with a spouse or partner (or Anyone else), or if you were authorized to use the account, the credit bureau must include information about the account both on your report and the joint user’s report. 4. Explain damaging items *** Filing bankruptcy may actually help you rebuild your credit.

10. How to Obtain a Home Mortgage with a Damaged Credit Report Under certain guidelines, a completed foreclosure on your credit will make it difficult to obtain a mortgage for about 3 to 5 years…you may need to satisfy additional requirements such as a larger down payment or maintain a higher credit score for up to 7 years. VA, FHA, and RHS mortgages have looser guidelines than Fannie Mae or Freddie Mac. If you want to take out a home mortgage despite problems with your credit record, there are several steps you should take. Foreclosure on your credit report- 3 to 5 years

11. How to Obtain a Home Mortgage with a Damaged Credit Report When the mortgage company questions an aspect of your credit record, try to explain any extenuating circumstances. You can also provide favorable information not present on your credit record, such as an excellent history of rent and utility payment. Shop around for a mortgage company that says it can accept your credit history. If a husband and wife are seeking a mortgage, and only one spouse has a bad credit record, you can apply in the name of the other spouse, relying exclusively on that spouse’s income and assets. In that case, the creditor is not allowed to look at the other spouse’s bad credit record.

12. Identity Theft How identity theft can ruin your credit record. * In some cases, you may have problems with your credit report even though you have paid all of your bills on time. * Someone may have stolen your credit card or Social Security number and used it to obtain credit, destroying your credit history in the process. This section gives you advice if you are a victim of Identity Theft. * You may not even know you are a victim of identity theft until you try to get new credit or apply for a loan and are unexpectedly rejected. Prevention is one of the most effective ways to avoid becoming a victim.

13. Tips to Avoid Identity Theft Below are some tips on how to avoid identity theft. 1) Place a “security freeze” on your credit history. 2) Do not carry your Social Security card with you. 3) Do not attach or write a personal ID number. 4) Shred any document that contains your credit card or Social Security number before throwing it away. 5) If your insurance company uses your Social Security number as your membership number, consider asking it to use another number.

14. Tips to Avoid Identity Theft 6) Alert your credit card lender if you do not receive your statements. Someone may be stealing your mail. 7) Do not give personal information or account numbers to anyone until you have confirmed the identity of the person requesting the information. 8) Frequently check your credit report to look for warning signs. 9) Put passwords on your credit card, bank, and home accounts. Avoid using easily available information like your mother’s maiden name or your birth date as a password.

15. What to do if you are a victim of identity theft? 1.Contact the fraud department of EACH major credit bureau to place a fraud alert on your credit report. 2.Contact your creditors to find out about any accounts that have been tampered with or opened fraudulently. 3.File a report with your local police or the police in the community where the identity theft took place. 4.File a complaint with the Federal Trade Commission. Federal credit reporting law provides special protections for active duty military. (e.g., Fair Credit Reporting Act, Fair and Accurate Credit Transactions Act) Consumers on active duty may place alerts on their credit file noting that they are on active duty. This helps prevent ID theft against soldiers.

16. Employment Background Checks and Other Specialty Consumer Reports Did you know that Experian, TransUnion, and Equifax are not the only “consumer reporting agencies” out there? Consumer reporting agencies are companies that collect information and provide reports on consumers that are used to decide whether to grant credit, insurance, employment, or for other purposes. Reports focusing on employment, medical, tenant, check writing, and insurance information are called specialty consumer reports. A common specialty consumer report is a background check for employment.

17. Employment Background Checks: Consumer Rights under Federal Law An employer must get your permission. However, if you do not give permission, the employer does not have to consider your application. Right to a copy of the report before taking action. If an employer intends to use a consumer report to take an “adverse action” (e.g., deny your application, fire you), you are entitled to a copy of the report before that the adverse action. Notice required. If an employer takes an adverse action against you based on information in a report, it must tell you –orally, in writing or electronically.

18. Resources http://www.myfico.com/crediteducation/whatsin yourscore.aspx