Topic 3
Credit Report
Questions to Think About:
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What are the different types of credit and why is credit important? What are its
advantages and disadvantages?
What is a credit report? How do you read it and evaluate it? How can you help a
client establish or repair credit?
How does credit impact future financial goals?
Learning Objectives:
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Understand the concept and definition of credit
Compare the advantages and disadvantages of using credit
Identify types of credit
Know creditors’ criteria for granting credit
Know how to read and evaluate a credit report; understand the importance of
doing so (links to identity theft)
Demonstrate understanding of how to correct or improve a credit report
Understand the criteria to establish a credit score; understand the impact of a
credit score
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REAL COST OF CREDIT
Terminology

Interest: The amount a borrower pays to use someone else’s money
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Annual Percentage Rate (APR): The annual cost of using the credit for the year; the figure
includes interest, transaction fees and service charges if any. This is the charge when a
borrower carries a balance
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Annual Fee: The cost of having the use of a credit card, or having access to the use of the
credit per year
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Finance Charge: This is the actual amount the borrower pays for using the credit for the
year
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Origination Fee: The cost of setting up a loan; this usually applies in the case of a mortgage
or real estate loan
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Loan Term: The period of time over which the borrower has to repay the loan
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Late Fees: The penalty that a borrower must pay if a payment is made late. This is in
addition to the interest that is calculated.
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Minimum Payment: Usually at least 2% of the outstanding balance. Most creditors will set a
minimum of $15 or $20/ month. Minimum payments have been rising recently.
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Grace Period: The number of days that a borrower will not have to pay interest. A good
strategy is to pay off the balance within the grace period whenever possible.
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YOUR FREE CREDIT REPORT
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Mail
 Write letters to the three credit bureaus: Experian, Equifax, and
TransUnion requesting a free copy of your credit report.
 Your letter should include your:
o Full name including middle initial and suffix (Jr., Sr., II, etc.)
o Date of birth
o Social Security number
o Current mailing address
o A prior address if your current address is less than 2 years
o If you are married, separate requests should be made for husband
and wife.
o Proof of mailing address by copy of 2 utility bills.
Telephone
Internet
 www.annualcreditreport.com
CREDIT
REPORTING
AGENCY
ADDRESS
TELEPHONE
NUMBER
WEBSITE ADDRESS
EXPERIAN
EXPERIAN
P.O. Box 2104
Allen, TX 75013
To obtain a report
1-888-397-3742
WWW.EXPERIAN.COM
To request a
EQUIFAX INFORMATION
report
SERVICES LLC
EQUIFAX
1-800-997-2493
WWW.EQUIFAX.COM
P.O. Box 740241
Customer Service
Atlanta, GA 30374
1-800-685-5000
To request a
TRANSUNION
report
CONSUMER SOLUTIONS
TRANSUNION
1-800-888-4213 WWW.TRANSUNION.COM
P.O. Box 2000
Customer Service
Chester, PA 19022
1-800-916-8800
PLEASE NOTE: Each person is entitled to one free copy of a credit report from each one of the
3 credit bureaus each year. If you have already received a free copy from any one or all credit
bureaus FOR 2010, you may bring that report so you do not have to pull another report. Credit
scores are not free.
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REVIEWING A SAMPLE CREDIT REPORT

Merged Report – Shows
information from all 3 bureaus
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Summary page
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
Check to make sure addresses are
yours
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Check employer information
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Aliases – maiden name,
nicknames, adopting name upon
citizenship, name changes
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Scores given by each
company may vary
based on scale and
information available to
them
Merged credit score was 615 when
information from all 3 reports aggregated
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Factors impacting score:
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Balance on revolving
loans too high
Short credit history
Too many active
accounts with balance
Not enough
Installment Debt
Experience
STRATEGIES FOR CREDIT REPAIR
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Immediately report any errors
Start paying on time
Severely delinquent payments – talk to creditors
Obtain secured credit card
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To dispute or correct credit reports, make sure you utilize your 100-word statement
Write to the Credit Bureau that supplied the information
In your letter be sure to include:
 Full name including middle initial and suffix (Jr., Sr., II, etc.)
 Date of birth
 Social Security number
 Current mailing address
 If applicable, the name and account number of the creditor and item in
question
 The specific reason for your disagreement with the disputed item
 Your signature
Passage of Time:
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Negative information reported for 7 years
Bankruptcies reported for 10 years
Criminal records – no time limit
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© January 23, 2013
Cities for Financial Empowerment Fund
All rights reserved.
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