Understanding Your Credit

1. Understanding Your Credit Purdue Employees Federal Credit Union

2. The Basics • What is a credit report? Information about: • Last known and previous address • Last known employer • Monthly debts • Loan repayment history • Credit balances vs. available limits

3. The Basics • What is a credit bureau? • Company that stores your credit information • Also known as Credit Reporting Agencies (CRA’s) • Three national reporting agencies: • TransUnion • Equifax • Experian (formerly TRW)

4. The Basics • Credit reports can be different depending on which agency it is being pulled from and for what purpose • Applying for an auto loan • Employment • Mortgage • Credit Card

5. Stands for Fair and Accurate Credit and Transactions (FACT) Act The FACT Act was signed into law December 2003 The FACT Act

6. The FACT Act • Provide better consumer credit protection • Free copy of credit report every 12 months from each of the CRA’s – www.annualcreditreport.com • Ensure credit histories are accurate • Create a national system of fraud detection • Red flag indicators • Fraud alerts • ID theft procedures • Establish communication between the 3 CRA’s

7. Your Credit Report • Your credit report is divided into 6 (six) main sections: • Consumer Information (address, birthday and employment) • Consumer Statement • Account Histories • Public Records • Inquiries • Creditor Contacts

11. Your Credit Score • What is a credit score? • A complex statistical model developed from thousands of consumer files • Why was the credit score created? • Credit scores came into wide use in the 1980’s • Used to eliminate judgment decisions • Create consistency and equality

12. Your Credit Score • How is my score calculated? • Payment history • Outstanding debt • Credit account history • Recent Inquiries • Types of Credit Scores may be different from report to report depending on the type of scoring model being used.

13. Your Credit Score • What factors don’t affect my credit score? • Debt ratio • Income • Length of residence • Length of employment

14. How To Improve Your Score • Pay your bills on time • Keep credit card balances low (under 35%) • Apply for and open new credit only as needed • Pay off debt instead of moving it around • Avoid excessive inquiries • Give yourself time

15. Create A Positive History • Print clearly an all credit applications • Consistently use your complete name • Pay your bills on time • Set up a budget • Review your credit report 60 to 90 days before making a major purchase (home or car)

16. Falling Behind? • Contact your lenders immediately • Stop using your credit limits until your finances are under control • Look to professionals for help

17. Credit Misconceptions • Your score will drop if you check your credit • Closing old accounts will improve your credit score • Once you pay off a negative record, it is removed from your credit report • Being a co-signer doesn’t make you responsible for the account • Paying off debt will add 50 points to your score

18. Possible Warning Signs Of Fraud • Strange data • Maxed-out credit cards • Late payments • Mistaken identity • Credit score differences

19. Emergency Contacts • Your financial institutions • The credit reporting agencies • TransUnion (800) 680-7289 • Equifax (800) 525-6285 • Experian (888) 397-3742 • The Federal Trade Commission • www.consumer.gov/idtheft • The police

20. Questions?