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The American Dream

The American Dream

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The American Dream

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  1. Understanding Your Credit Report The American Dream Homebuyer Education

  2. What Are My Rights? • Fair Credit Reporting Act • Governs Consumer Reporting Agencies • Monitored by Federal Trade Commission • Protect Consumer Rights

  3. What Are My Rights? • Access to your own file • Right to dispute inaccurate information • Inaccurate information must be corrected or deleted • Outdated information may not be reported • Consent required for access to your file • Can seek damages if Act is violated

  4. What Is A Credit Report? • Record of an individuals credit history • 3 major credit bureaus compile information • Equifax • TransUnion • Experian (formerly TRW) • Used by credit grantors, insurance companies, landlords and employers

  5. What’s Reported on a Credit Report? Personal Information Credit Information Collection Information Public Records Inquires

  6. How Long Does Information Stay on the Credit Report? • Late payments/delinquencies 7 years • Accounts in collection 7 years • Charge-offs or profit/loss write-offs 7 years • Repossession 7 years • Student loan defaults 7 years • Liens or judgments – paid or open 7 years • Bankruptcy • Chapter 7 10 years • Chapter 13 7 years

  7. How Can I Obtain My Credit Report? • Order through 3 major bureaus • www.annualcreditreport.com • Get a free copy if • Denied credit, housing, employment, insurance • Unemployed • Adverse action taken • Inaccuracy due to fraud • Public Assistance

  8. How Can I Dispute Information? • Can dispute inaccurate and outdated information • Put it in writing to each bureau • Bureau has reasonable time to respond • Place 100 word statement on report

  9. What is a Credit Score? • A number showing your credit risk • Answers a lenders question • “If I give this person a loan or credit card, how likely is it that I will get paid back on time?”

  10. How Scoring Works • A credit score is the result of a mathematical equation • Scores range from 300 to 850 • The lower the score, the higher the risk • Credit scores help lenders make credit decisions

  11. Your Credit Report: The Basics of your Score • Credit Reporting Agencies maintain files on millions of borrowers • Data shows: • Whether you’ve paid your bills on time • How much credit you’ve used • Types of credit in use • Length of time your accounts have been open • Whether you’re seeking new credit

  12. How Can I Improve My Credit Score? • Pay on time • Repay old debt • Keep balances low • Minimize balance transfers • Apply for new credit sparingly

  13. How Your Credit Score Impacts You • The payoff can be huge • Example • 30-year fixed rate mortgage of $150,000 • Improve your credit score from 550 to 700 • Save approximately $131,000 over the life of the loan – or $365 per month

  14. Understanding Your Credit Report The American Dream Homebuyer Education