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Unlocking Credit

& Identity Theft

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Introduction

Jesse OstdiekPinnacle Bank

Real Estate BrokerVice President-

Mortgage Lending

402-960-0330

Jesse.Ostdiek@pinnbank.com

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What to learn…• What is FICO?

– Range & Averages– How it helps you– What makes up your score– Tips to improve your score– Credit Statistics

• Your Credit Report– What’s inside– Myths and Truths– Errors & How to Correct them– Your Rights– How to monitor & freeze your credit

• Identity Theft– Statistics– How they get your info– 6 Warning Signs– How to Protect Yourself– What to do if it happens

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Your Fico Score

• FICO - Fair Issac Corporation (credit scoring model)• Important measurement that affects your ability to

get credit, the terms & payment• Most trusted and widely used score

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What is a FICO Credit Score

• 3 Digit Score: Estimates a consumer’s willingness & ability to repay a debt based on previous behaviors

• Statistical analysis that removes the judgmental & subjective aspects of determining whether credit should be granted

• Over 75% of mortgage lenders & 90% of the top 100 lenders use it to determine credit worthiness

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Range & Averages

• Ranges between 350 to 850

• Most fall between 600–800

• > 740 equals the Best Rates & Terms

• Nebraska average: 695

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Does it Really Matter?• Borrower 1 $240,000 30 Yr Mortgage Loan

– Score: 741• 4.75% with Monthly P&I : $965• Total Interest: $162,400

• Borrower 2– Score: 739

• 4.875% with Monthly P&I : $979• Total Interest: $167,450• Costs $14 more monthly, $168 annually or $5000 more over 30 yrs

• Borrower 3– Score: 640

• 5.5% with Monthly P&I : $1050• Total Interest: $193,000• Costs $95 more monthly, $1,140 annually or $30,600 more over 30 yrs

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How Credit Scoring Helps You

• People Get Loans Faster

• Credit Decisions are Fairer

• Credit Mistakes Count for Less

• More Credit is Available

• Credit Rates are Lower Overall

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What Makes Up Your Fico Score

• 35% - Payment History

• 30% - Amounts Owed & Type

• 15% - Length of Credit History

• 10% - New Credit

• 10% - Types of Credit Used

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Tips on Improving Your Credit Score

• Payment History– Get Current & be on time– Avoid collections, they stay for 7yrs

• Amounts Owed– Amounts Owed vs. Available Credit– Keep low balances , increase credit limits

• Length of Credit History– New accts lower your overall avg acct age– Longer history with creditor is better

• New Credit– Rate shop within 30 days– Limit requests for new credit

• Types of Credit Use– Use all types of credit including credit cards

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Credit Statistics

• # of Credit Obligations Per Person

• Past Payment Performance

• Credit Credit Utilization

• Total Credit Utilization

13; of which 9 are credit cards & 4 installment

40% of credit card holders carry a balance of < $1000 15% are in excess of $10,000

< than 50% have been 30 days lateOnly 3 of 10 have been 60 days late77% have never been 90+ late

Excluding mortgage, 48% carry less than $5000 of debt. 37% have more than $10,000 in debt

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Credit Statistics

• Total Available Credit

• Length of Credit History

• Credit Inquiries

Typical consumer has access to $19,000 on credit cardsMore than half use < 30% of limit1 in 17 use > 80% of card limit

Avg. consumer has had only 1 inquiry in the past year.Fewer than 6% had 4+ in last year

Avg. oldest trade line is 14 yrs25% have 20+ yrs of credit historyOnly 1 in 20 have < 2 yrs of history

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Unlocking Credit

& Identity Theft

Your Credit Report

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What’s In My Credit Report?

• Identifying Information– Name, Address, Social Security #, DOB, employment & residence history. This

info is not used in determining your credit score

• Trade Lines– Your accounts, payment history & specific details of each acct

• Credit Inquiries– List of all creditors that have accessed your credit recently

• Public Record and Collection Items– Information collected from state & county courts including overdue debt from

collection agencies, bankruptcies, liens, child support & judgments

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Who Keeps Track of My Credit

• The Three Credit Bureaus

– Experian

– Equifax

– TransUnion

You have the right to access Your Credit ReportOnce Each Year from each or 3 times a year total

AnnualCreditReport.com

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Types of Credit Reports

• One Bureau Credit Report– Most Companies Use

– Consumer can pull for free

– One or no FICO scores

• Tri-Merged Credit Report– Most Mortgage Lenders Use

– Combines all three Bureaus

– All three FICO scores

*Consumer ReportMore Secure: No Social security or account numbers shown

Free if denied for credit, must request in writing

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Credit Score Facts & MythsMyth

• Score solely determines whether I get credit

• A poor score will haunt me forever

• Credit scoring is unfair to certain types of people

• My Score will drop if I apply for new credit

Fact

• Lenders use many factors in determining whether to loan.

• Just the opposite is true. It is a snapshot of your risk at that particular moment.

• No, credit score only considers credit related information.

• Not Necessarily. You have 30 days on auto and mortgage inquiries to make inquiries without penalty.

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Fixing Mistakes & Errors

How Credit Mistakes are Made• Person applies under different names

(Robert Jones vs. Bob Jones)

• Clerical Errors in reading or inputting

• Loan or Credit Card payments applied to wrong account

Fixing Credit Errors• Contact both Bureau & Creditor to

dispute– Online or mail

• Both are responsible for correcting the error

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Sample Credit Report Dispute Letter

DateYour NameYour AddressYour City, State, Zip Code

Complaint DepartmentName of Credit BureauAddressCity, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of thereport I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) isinaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted ( or request anotherspecific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supportingmy position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (list what you are enclosing)

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Know Your Rights• Right to receive copy of your credit

report from each bureau once per year

• To know the name of anyone who has received your credit report or inquired

• Receive your credit report, upon your written request, if you have been denied for credit

• Have right to add a summary explanation to your credit report regarding disputes

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Credit Monitoring Options

• Review your credit report from each bureau annually– Federal law gives you the right to one free copy of your credit– Annualcreditreport.com ( consumer site)– Other sites like freecreditreport.com sell their services

• Subscribe to Monthly Monitoring Service:– Use one of the three bureaus monitoring service– Costs range from $5 to $25 for basic monthly monitoring

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Lock or Freeze Your Credit• A Security Freeze means your file cannot be shared with

potential creditors.

• No new accounts can be opened without contacting you & getting your permission

• Can prevent new account identity theft

• Can be temporarily unfrozen

• $15 per Bureau per person

Step by Step Guide:

http://www.consumersunion.org/pdf/security/securityNE.pdf

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Identity Theft

“Prevention is Better than the Cure”

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ID Theft

• Statistics – 11 million

• How they get your info

• 6 Warning Signs

• How To Protect Yourself

• What to do if Identity Theft Strikes You?

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2009 Statistics11.1 Million Adult Victims

Increased by 12% Highest increase in last 7 years

Total Fraud Amount: $54 Billion

4.8% of the U.S. population was a victim of identity fraud

Average Fraud Amount : $4841

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2009 Statistics

13% of fraudCommitted by someone

the victim knew

21 hours & $373 Time & Money spent out of

pocket resolving the crime

18-24 Year OldsMost likely victims

Time Until Discovery:38-48% within 3 months

9-18% take 4+ years

Odds of Thief Going to Jail: 1 in 1000

Estimated $221 Billion a year

lost by businesses worldwide

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How they get your Personal Info

Lost or stolen Wallets

Card Skimming

Mobile Smartphone

Mailbox raiding/dumpster diving

Online Methods-Email

Data Breaches

“Friendly Theft”

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By The Numbers

43%From Stolen Wallets

Or Documents

11%Stolen Online

38%Debit/Credit CardNumbers Stolen

Albert Gonzalez

30 Million credit card and account numbers stolen

Several large corporate databases hacked

Over $200 Million in Losses

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6 Warning Signs of Identity Theft

• Receive billing statements for credit you’ve never applied for

• Your Credit Card bill doesn’t come at all

• You billing statement includes charges you didn’t make

• Your credit card is unexpectedly declined for being over the limit

• Calls from debt collectors about accounts that aren’t yours

• Unexpectedly denied for a credit card or loan

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How to Protect Yourself

• Monitor Your Credit

• Computer Security

• Protect Sensitive Information

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Monitor Your Credit!

• Alert you to new credit & inquiries

• Some monitor web for your info

• Services cost $10-20 per month

• Critics say you can do most of this

• Identity Theft Services– Life Lock– ID Watchdog

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Basic Computer Security

• Password protect your home wireless network• Don’t download attachments w/o scanning• Keep Up to Date Security Software

– Anti virus & anti spy ware

• Use a Firewall• Install Windows Updates• Be careful where you click-phishing

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Basics of Protecting Your Information

• Use a Shredder!

• Opt out of pre-approved credit offers

• Safeguard your SS#

• Don’t email sensitive information

• Don’t print SS / Driver’s license # on checks

• Consider a Locked Mailbox or PO Box

• Cut up Old Credit Cards

• Shop securely online

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What to do if it happens to you?

• Notify, monitor & freeze Credit• Contact creditors immediately if

an account is opened• Report to Law Enforcement• If checks, ATM, Debit cards or

Bank accts are stolen, contact your Bank immediately

• Report to FTC• Keep good records

http://www.privacyrights.org/fs/fs17a.htm

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In Summary….Lets Review• What is FICO?

– Range & Averages– How it helps you– What makes up your score– Tips to improve your score– Credit Statistics

• Your Credit Report– What’s inside– Myths and Truths– Errors & How to Correct them– Your Rights– How to monitor & freeze your credit

• Identity Theft– Statistics– How they get your info– 6 Warning Signs– How to Protect Yourself– What to do if it happens

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Credit Bureaus

• Transunion– 1-800-680-7289– www.transunion.com– Fraud Victim Division– P.O. Box 6790– Fullerton, CA 92834-6790

• Experian– 1-888-397-3742– www.experian.com– P.O. Box 9532– Allen, TX 75013• Equifax

– 1-800-525-6285– www.equifax.com– P.O Box 740241– Atlanta, GA 30374-0241

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Other resources

• Annual Credit Report– www.annualcreditreport.com

• Reduce Telemarketer Calls– 1-888-382-1222– www.donotcall.gov

• Protect Your Privacy– Remove your name from pre-

approved credit applications – www.optoutprescreen.com

• U.S. Department of State– Report lost or stolen passport– 1-877-487-2778– www.travel.state.gov

• Social Security Administration– Only to replace a missing or

stolen social security card– www.ssa.gov

• Federal Trade Commission– 1-877-438-4338– www.consumer.gov/idtheft

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Other Resources

• Identity Theft 911– Extensive Online center– www.identitytheft911.org

• Privacy Rights Clearinghouse– Nonprofit consumer info– www.privacyrights.org

• Identity Theft Resource Center– Non-profit support– www.idtheftcenter.org

• US Postal Service– www.usps.com

• State Attorney General– www.naag.org

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Learn More….

Visit our websitePinnacleBankRealEstate.com

402-960-0330

Credit and Identity Theft EducationFor a Copy of this presentation

Click “Home”, then “Credit and Identity Theft”Input pinnaclebank as password

8 Steps to Effective Home Buying EducationClick 8 Steps To Buy at the top