Credit and Credit Reports
Presented by Nancy Adelson
Senior Loan Originator, Spectrum Mortgage
NSCC Real Estate Program Coordinator
For NSCC Investment Club
February 1, 2011
Benefits of Credit
 Convenient
 Buy homes, cars, major purchases
 Start and/or expand business
 Display good credit history
 Increase future borrowing power
Disadvantage of Credit
 Buy more than able to afford or pay back
 Incur costly finance charges or higher rates
 Debtor’s security/collateral may be
repossessed
 Creditor may use legal action to collect
 Generate poor credit history
 Closes door to future borrowing
Key Words Defined
 Credit: The right to pay later for products and
services purchased today
 Finance Charge: The extra cost for credit
 Creditor: The party who sells the goods or services
on credit or lends money
 Debtor: The party who buys the goods or services
on credit or borrows money
 Secured/Installment Loan: Creditors own rights to
debtor’s asset (collateral) if debtor doesn’t pay
 Unsecured/Revolving Loan: No collateral provided
Key Words Defined Continued
 Delinquent Payment: Payment received by
creditor 30 days or more past due date
 Credit Reporting Agency/Bureau (CRA):
Repository of credit information collected from
credit grantors
 Credit Report: Provided by credit bureaus
containing detailed information on credit history
 Credit Worthy: The likelihood of repaying loan &
making payments on time
 Credit Score: Based on credit history providing a
measure of credit worthiness
FICO Scoring
 Credit scoring system developed by the Fair
Isaac Company
 Used by 90% of US lenders & creditors
 FICO score range is 350 to 850
 Consumers who are good credit risks have
higher credit scores
 1:1,300 US citizens have credit scores
above 800
Five Factors of FICO Scoring
 Payment History: Paying debts in full and
on time
 Outstanding Credit Card Balances: Marks
ratio between outstanding balance &
available credit
 Credit History: Length of time since opened
accounts
 Type of Credit: Mix of installment and
revolving accounts
 Inquiries: Credit inquiries within 12 months
Fair Credit Reporting Act
of 1970
 Governs the collection, dissemination, and
use of consumer credit information
 Protects consumers from fraudulent and
inaccurate credit reporting agency reports
 Requires Credit Reporting Agencies (CRA) to
remove past credit items in a reasonable time
 Offers more protection for the privacy of
consumers
Fair and Accurate Credit
Transaction Act of 2003
 Amended Fair Credit Reporting Act
 Allows consumers to obtain one free credit
report every 12 months from each CRA
 Central web site for free annual credit
reports: www.annualcreditreport.com
 Reduces identity theft by permitting the
people to place alerts on their credit histories
if identity theft is suspected
 Requires secure disposal of consumer
information
Credit Reports
 Produced by Credit Reporting Agencies
(CRA) (aka Credit Bureaus)
 Shows individual’s credit history, personal
information, employment, residence, credit
inquiries and legal actions (liens, collections,
bankruptcies, garnishments, judgments, etc.)
 Rates credit risk and payment history
 Information provided by creditors and public
records
 Time limits on your record: inquiries, 2 years; late
payments, foreclosure, collection accounts & Chapter 13
bankruptcy, 7 years; Chapter 7 bankruptcy, 10 years; unpaid
liens, forever.
Improve Your Credit Score
 Time heals bad credit
 Pay on time and payoff revolving debts
 Negotiate and pay off collections, judgments
and liens
 Keep and use “old” revolving accounts
 Use 5 trade-lines
– 3 revolving & 2 installment
 Regularly review and fix your credit reports
from each Credit Reporting Agency (CRA)
 Don’t allow creditor inquiries
Free Credit Reports
 Call 1-877-322-8228
 Complete the Annual Credit Report Form &
mail Annual Credit Report Request Service,
PO Box 105281, Atlanta, GA 30348-5281
 Go to https://www.annualcreditreport.com/cra/index.jsp
First Steps to
Repairing Your Credit
 Remember car dealers, landlords, creditors,
lenders, insurers etc. check your credit reports
 To ensure proper correction, first contact the
creditors and get documentation/proof
 Then contact all CRA’s with request and
documentation
Credit Reporting Agencies
Contact Information
Repair Your Credit
Charge $15-$17 for each FICO Score
 Equifax -- 1-800-685-1111
http://www.equifax.com
 Experian -- 1-888-397-3742
http://www.experian.com
 TransUnion -- 1-800-916-8800
http://www.transunion.com
Repair Your Credit Online
Repair Your Credit by Letter
Experian
Trans Union Corp.
Equifax
Attn: NCAC
Attn: Disputes
Attn: Disputes
P.O. Box 2002
P. O. Box 1000
P. O. Box 740241
Allen, Texas 75013
Chester, PA 19022
Atlanta, GA 30374
I dispute the accuracy of my credit file as revealed to me on [Give Date].
In accordance with Section 611 of the Fair Credit Reporting Act, I hereby
request that you investigate the current status of the information I have
disputed below.
Credit Grantor:________
Account No.:_________
The disputed portion reads: _____
I maintain that:_____
Your Name and Your Address
Your Social Security Number
Your Signature and Date
Read More and Learn More
http://www.mtgprofessor.com/credit_issues.htm
Conclusion
 Use credit wisely and reap the benefits
 Know your rights as consumers
 Be aware of finance charges and fine print
in contracts
Questions?
Nancy Adelson
nancyadelson@comcast.net