Shravya Sarathy - Credit_Reports_and_Scores_Note_Taking_Guide_2.6.1.L1.pdf

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Unformatted text preview: Page | 14 2.6.1.L1 Credit Reports and Scores Note Taking Guide Total Points Earned Name Total Points Possible Percentage Date 1/22/21 Class 1 A lender is: A borrower is: Someone who receives something with the promise to return it or to repay what is borrowed A credit history is: A credit report is: Record of the borrower’s past loan and creditrelated transactions Person or organization who makes funds available for others to borrow Record, created by a CRA, of an individual’s credit history What are the names of the three credit reporting agencies? Equifax, Experian, TransUnion How are credit reports created? The lender reports a consumer’s account history to Credit Report Agencies (CRAs). The CRAs keep a record of a consumer’s account history (credit history). They then create a report using this information and that is a credit report What are three examples of personal information on a credit report? Name, DOB, phone number What are the types of credit account information? Type of credit Loan amount or credit limit Date Payment Information Account Balance © Take Charge Today – April 2014 – Credit Reports and Scores Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Page | 15 2.6.1.L1 Types of Credit Closed‐end Open‐End Also known as: Definition Example Installment Borrower repays a specified number of equal payments Automobile loans Education loans Mortgages Credit cards Revolving Line of credit established in advance Place the following symbols on each section of Sam’s Electronic World Account described by the corresponding type of information. Type of credit Loan amount/credit limit Date account was opened Account balance Payment information SAM’S ELECTRONIC WORLD Address: Account Number: 123 MAIN STREET 3624**** ANYWHERE, AZ 00000 Status: Open/Past due 60 days. Date Opened: 02/2009 Reported Since: 02/2010 Date of Status: 10/2012 Last Reported: 10/2012 Type: Revolving Terms: N/A Monthly Payment: $0 Responsibility: INDIVIDUAL Credit Limit/Original Amount: $500 High Balance: $550 Recent Balance: $84 as of 11/2012 Recent Payment: $0 Account History: 60 days as of 10‐2012 30 days as of 09‐2012 What types of public record information may be in a credit report? Collection Agencies: Businesses hired by lenders to pursue payments on debts not paid back according to contract terms Bankruptcy: When an individual or business is not able to repay outstanding debts Tax liens: Tax not paid in full Foreclosure: Borrower fails to keep up with mortgage payments and the lender takes possession of the property When are inquiries potentially negative? Seeking additional credit or impact is reduced if of loan within a 14shopping for the same type day period. When do inquiries typically have no impact? Inquiries not initiated by you, inquiries not related to credit, or checking your own report. © Take Charge Today – April 2014 – Credit Reports and Scores Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Page | 16 2.6.1.L1 Examples of lenders: When do lenders report? They report ALL information positive or negative. Depository institutions Credit card companies Mortgage and finance companies Retail stores that offer credit accounts Who reports to CRA's? Examples of data furnishers: When do data furnishers report? Landlords Medical providers Cell phone companies Utility accounts They report when money is owed to them 5 examples of information not in a credit report Criminal backgroun d Race & gender Buying habits Non-credit depository institution accounts Religion & nationality Why is time the only way to remove negative information from a credit report? Some negative information stays on the report for 7-10 years so the only real way to get rid of it is waiting. What is a credit score? Mathematical number created to help evaluate the risk with lending a consumer money Who, most commonly, produces scores? FICO & VantageScore What information is included in a credit score? Everything that is in the credit report What are the score ranges of the two most common systems? FICO: 300 - 850 A credit score reflects a particular... What does a score indicate about a consumer? Point in time It indicates their financial reliability A higher score typically means what? Does a consumer have one or multiple scores? Higher chance of credit repayment Multiple VantageScore: 501 990 © Take Charge Today – April 2014 – Credit Reports and Scores Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Page | 17 2.6.1.L1 In addition to access to credit, what are two other ways an individual’s credit history may impact them? It can have an impact on insurance rates, employment, housing, and public utility services Pay your bills consistently and on time Maintain reasonable amounts of available credit 5 strategies to build a positive credit history include: Apply for credit sparingly Have a mix of different types of credit accounts Check your credit report annually What are two strategies to acquire and positively manage small lines of credit? Small close-ended loan: From a depository institution with set up automatic payments Credit card with a co-signer: Co-signer is a person who is equally responsible for paying back debt How often can a free credit report be requested? One free credit report annually from each of the three credit reporting agencies What is the only government‐ sponored website? AnnualCreditReport.com How is a co‐signer impacted? They are equally responsible in paying back debt How are credit scores accessed? They must be ordered separately and usually cost a fee. The 3 CRA’s are the primary sources and the scores may differ between each CRA. If an error is found, a consumer should: Contact the CRA & company that provided the incorrect information Wait 30 days for the Credit Agency to investigate If error found, correct information must be provided to all three CRA’s If dispute is not resolved, consumer may add a dispute statement to their report © Take Charge Today – April 2014 – Credit Reports and Scores Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona ...
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