Credit Reporting and Credit Scores in CARE Presentation

 
Introduction to Credit
Reporting and Credit Scores
 
Credit Abuse Resistance Education (CARE) Presentation
 
Warm-Up
 
What is the first thing that comes to mind
when I say the word: 
Credit
?
…how about – 
Credit Report
?
…and finally - 
Credit Score
?
 
Raise your hand or type your response in the Chat.
 
2
Let’s Review What is 
C
redit
3
Credit is the ability to borrow money
Borrowing money creates debt
Debt is what you owe
It costs money to borrow money
Adults can’t fix everything
How to rescue your credit - before it needs saving!
Credit history begins when you choose and
use credit services
 
Your Credit History Affects Whether You Can Buy
Things, and How Much they’ll Cost You
 
4
A good history will help you get what you
need to improve your quality of life
A bad credit history will hold you back, and your missteps
will follow you for as long as 
10 years
 
Your Credit History Matters!
 
5
 
How Do You Get Credit?
 
An adult includes you as an 
Authorized User 
on their
account (such as a credit card)
An adult 
co-signs
 a loan (such as a car loan)
You may be able to open a 
Secured Credit Card 
account
with a bank by using a savings account for collateral, or
an 
Unsecured Card 
(such as with a store like Target
Once you have credit, the credit reporting agencies will
learn about it and will open a file for you
 
 
6
YOUR ADULT REPORT CARD!
 
What is a C
redit Report
?
It is prepared by 
credit
reporting agencies
 for
use by stores, banks,
landlords, and other
businesses that give
credit
It lists the
 
type
 of credit
you use, the length of
time
 your accounts have
been open, and whether
you have 
paid your bills
on time
Tells lenders how much
credit you have 
used
and whether you are
seeking more credit
 
Summary of your financial reliability
 
7
 
How can you get a Copy
of Your Credit Report from
the Three National Credit
Reporting Companies?
 
You can get one 
free
 
report every 12 months:
 
 
Visit 
AnnualCreditReport.com
 
to download
 
8
 
Free Reports or Scores
 
You can also get 
free
 reports or scores from sources such as:
 
9
A
The
Government
B
Banks
C
Credit
Reporting
Companies
C
Social Media
Companies
 
Who Creates and Maintains Credit Reports?
 
10
YOUR ADULT G.P.A.!
 
What is a 
Credit Score
?
A number calculated by a special
company that is used by stores,
banks, and other businesses as
an indicator of 
how likely you
are to repay your debts
A Snapshot 
of your
 
current
financial situation
Each company that gives credit
has its 
own strategy
 
for using
credit scores, and 
there are
many different scores
If a company denies credit,
 
it
must disclose the reasons
 
Generated by a mathematical formula
 
11
 
What’s in a Credit Score?
These 
ARE
 in a
credit score:
Payment history
Outstanding debt (balances)
Credit account history and usage
Recent “hard” inquiries
*
Types of credit used
These are 
NOT
:
Demographic information
Age, race, religion, national origin, gender,
sexual orientation, marital
status, residence, child / family support
obligations
Employment information
Salary, occupation, title
Other credit information
Interest rates, “soft” inquiries
*
, usage
of a credit counseling company
 
12
 
* “Hard” inquiries are typically applications for credit and they ARE used in a score; “soft” inquiries are usually for marketing
prescreening and are NOT used in credit scoring
Payment history
Account payment information
Bad public records
Amount of past due accounts
Number of past due items
Types of credit used
Number of various types of accounts
Amount owed
Outstanding balances on accounts
Proportions of balances to total credit limits
Proportion of installment loan amounts
New Credit
Number of recently opened accounts
Number of recent inquiries
Credit history length
Time since accounts opened
 
Sample Data Research & Pie Graph
Paying on-time and keeping balances low are most important!
 
13
 
What’s a Good Credit Score?
 
Depends on the score; typically, 
the
higher
 
the score 
the better
Each company 
decides
 
what it thinks a
good score is
For example, your credit score might be
690
Based on one system, here is how you
may be viewed by a company that gives
credit
V
e
r
y
p
o
o
r
Poor
Fair
Good
Very
Good
 
300
 
900
 
400
 
500
 
600
 
700
 
800
 
You are here
 
You are here
 
14
A
Decrease in
overall credit
utilization
B
Closed credit
card
C
Small missed
payment
C
New car loan
 
Which of these Will Likely 
Increase
your Credit Score
 
15
The single most important part of your credit
score is whether you make
 payments on time
 
Credit Management Tips
 
Your mom can make a payment for you
But your mom cannot make a late payment not late
Consider “Autopay” on your accounts
 
A late payment stays on your credit history and impacts
your credit score (up to 
10 years)
 
16
 
More Credit Management Tips…
Set Goals
 
Monitor your transactions
Check your credit report at least every
three months
Improve your credit score 50 points or
to above 650
Reduce your credit balances to below
30% of available credit limit
Create a budget and stick to it
Clean up your records
 
Dispute inaccuracies on your credit
report
Remove expired debts and collection
accounts
Consider refinancing a credit balance
Guard against identity theft
 
17
 
Top 5 Misconceptions About Credit Scores
 
18
If You Find a Mistake…
You have the right to dispute inaccurate information on your credit report
19
A
Hard inquiries
B
Paid-off
accounts
C
Home address
C
Zero balances
 
Which Element Does 
NOT
 Go into a Credit Score?
 
20
A
Nothing
B
Credut Score is
incorrectly low
C
Denied credit
C
“B” and “C”
 
Which can Happen if a Delinquency is Wrongfully
Reported on Your Credit Report
 
21
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Explore the essential concepts of credit reporting and credit scores in the context of Credit Abuse Resistance Education (CARE). Learn about credit history, its impact on financial decisions, ways to establish credit, the significance of credit reports, and how credit behaviors affect one's financial future.


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  1. Introduction to Credit Reporting and Credit Scores Credit Abuse Resistance Education (CARE) Presentation carechicago.org

  2. Warm-Up What is the first thing that comes to mind when I say the word: Credit? how about Credit Report? and finally - Credit Score? Raise your hand or type your response in the Chat. 2 carechicago.org

  3. Lets Review What is Credit Credit is the ability to borrow money Borrowing money creates debt Debt is what you owe It costs money to borrow money Adults can t fix everything How to rescue your credit - before it needs saving! 3 carechicago.org

  4. Your Credit History Affects Whether You Can Buy Things, and How Much they ll Cost You Credit history begins when you choose and use credit services Credit cards Car loans / leases Student loans Mortgages Insurance Rent leases Employment 4 carechicago.org

  5. Your Credit History Matters! A good history will help you get what you need to improve your quality of life A bad credit history will hold you back, and your missteps will follow you for as long as 10 years 5 carechicago.org

  6. How Do You Get Credit? An adult includes you as an Authorized User on their account (such as a credit card) An adult co-signs a loan (such as a car loan) You may be able to open a Secured Credit Card account with a bank by using a savings account for collateral, or an Unsecured Card (such as with a store like Target Once you have credit, the credit reporting agencies will learn about it and will open a file for you 6 carechicago.org

  7. What is a Credit Report? YOUR ADULT REPORT CARD! It is prepared by credit reporting agencies for use by stores, banks, landlords, and other businesses that give credit Tells lenders how much credit you have used and whether you are seeking more credit It lists the type of credit you use, the length of time your accounts have been open, and whether you have paid your bills on time Summary of your financial reliability 7 carechicago.org

  8. How can you get a Copy of Your Credit Report from the Three National Credit Reporting Companies? You can get one free report every 12 months: Visit AnnualCreditReport.com to download 8 carechicago.org

  9. Free Reports or Scores You can also get free reports or scores from sources such as: c c c c c c c c c 9 carechicago.org

  10. Who Creates and Maintains Credit Reports? A The B C C Banks Credit Reporting Companies Social Media Companies Government 10 carechicago.org

  11. What is a Credit Score? YOUR ADULT G.P.A.! A number calculated by a special company that is used by stores, banks, and other businesses as an indicator of how likely you are to repay your debts Each company that gives credit has its own strategy for using credit scores, and there are many different scores A Snapshot of your current financial situation If a company denies credit, it must disclose the reasons Generated by a mathematical formula 11 carechicago.org

  12. Whats in a Credit Score? These ARE in a credit score: These are NOT: Demographic information Age, race, religion, national origin, gender, sexual orientation, marital status, residence, child / family support obligations Payment history Outstanding debt (balances) Credit account history and usage Employment information Salary, occupation, title Recent hard inquiries* Other credit information Interest rates, soft inquiries*, usage of a credit counseling company Types of credit used * Hard inquiries are typically applications for credit and they ARE used in a score; soft inquiries are usually for marketing prescreening and are NOT used in credit scoring 12 carechicago.org

  13. Sample Data Research & Pie Graph Paying on-time and keeping balances low are most important! Payment history New Credit Account payment information Number of recently opened accounts Bad public records 10% Number of recent inquiries Amount of past due accounts 35% Number of past due items 15% Credit history length Types of credit used Number of various types of accounts Time since accounts opened 10% 30% Amount owed Outstanding balances on accounts Proportions of balances to total credit limits Proportion of installment loan amounts 13 carechicago.org

  14. Whats a Good Credit Score? Depends on the score; typically, the higher the score the better 300 400 500 600 700 800 900 Each company decides what it thinks a good score is You are here For example, your credit score might be 690 Very poor Very Good Poor Fair Good Based on one system, here is how you may be viewed by a company that gives credit You are here 14 carechicago.org

  15. Which of these Will Likely Increase your Credit Score A B C C Decrease in overall credit utilization Closed credit card Small missed payment New car loan 15 carechicago.org

  16. Credit Management Tips The single most important part of your credit score is whether you make payments on time Your mom can make a payment for you But your mom cannot make a late payment not late Consider Autopay on your accounts A late payment stays on your credit history and impacts your credit score (up to 10 years) 16 carechicago.org

  17. More Credit Management Tips Set Goals Clean up your records Dispute inaccuracies on your credit report Remove expired debts and collection accounts Consider refinancing a credit balance Guard against identity theft Monitor your transactions Check your credit report at least every three months Improve your credit score 50 points or to above 650 Reduce your credit balances to below 30% of available credit limit Create a budget and stick to it 17 carechicago.org

  18. Top 5 Misconceptions About Credit Scores 4 1 2 3 5 Being a co- signer doesn t make you responsible for the account Paying off a debt will add 50 points to your credit score Once you pay off a bad record, it is removed from your credit report Your credit score will drop if you check your credit report Closing old accounts will improve your credit score 18 carechicago.org

  19. If You Find a Mistake At the conclusion of the investigation, or within 30 days, you ll be notified of the outcome Credit reporting agency will investigate the issue If this does not work, contact the credit reporting agency reporting the inaccurate information Next, contact the company responsible for the inaccuracy and try to resolve the issue First, correctly identify inaccurate information You have the right to dispute inaccurate information on your credit report 19 carechicago.org

  20. Which Element Does NOT Go into a Credit Score? A B C C Hard inquiries Paid-off accounts Home address Zero balances 20 carechicago.org

  21. Which can Happen if a Delinquency is Wrongfully Reported on Your Credit Report A B C C Nothing Credut Score is incorrectly low Denied credit B and C 21 carechicago.org

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