HUMS 202 Lecture Notes - Lecture 7: Fair Credit Reporting Act, Savings Account, Medical History

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7 Feb 2017
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Credit → ability to borrow money
Good credit means make loan payments on time → easier and cheaper to borrow
money in future, get job easier, and rent easier
collateral : something you provide to lender to secure a loan (asset you own that’s giver to
lender if you don’t repay loan)
Guarantee: cosigning a loan
Credit report shows how much debt you have, whether you have made payments on time, and if
there is any negative info about you in public records
Three main credit reporting agencies:
1. Equifax
2. Experian
3. Transunion
a. Maintain background data like SSN & addresses; collect info abt bankruptcy
filings, receive info from creditors if you pay credit card on time, provide copy of
credit report to lenders
Public Record Information
-judgement: court confirmation of debt owed to creditor, remains on credit report for 7 years and
if not paid, creditor can petition the court for a claim on assets you own
-tax lien: claim against property or assets for unpaid taxes on those assets
-collection account: past-due account referred to specialist to collect part or all of debt
-bankruptcy: very negative impact on credit score, last resort
Credit reports do not contain:
Medical history, income, checking and savings account balances, race, gender, religion, driving
record
Loan application can be denied if bad credit history or no credit history
Credit score based on info in credit report!!!!!!!!!
1. FICO: scoring model ranging from 300-850
a. Past payment history =35%, debt= 30%, length of credit = 15%, types of credit =
10%, new apps for credit = 10%
2. Vantage score: offered by all 3 credit reporting agencies; 501-990
**higher score = better** credit score can be improved
Inquiries (like asking about a loan) may or may not affect credit score b/c they can suggest that
you are having financial troubles
Fair Credit Reporting Act allows you to obtain free copy of credit report from each major credit
reporting agencies once every 12 months
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