Understanding Credit: Part One

This is part one of a three part series on credit by our Credit Manager, Cathy Latiolais. Cathy has over 17 years of experience with lending and has helped thousands of members over the years.

Creditworthiness represents a person’s ability to borrow.  Credit reporting Organizations use the credit scoring system to determine whether a specific person is creditworthy and attempts to predict the likelihood a person will make payments for goods and services.   Two types of credit information play a very big role in determining whether a person has access to credit.

  1. The Credit Report
  2. The Credit ScoreSavvyMoney

Establishing credit can be difficult and it requires taking steps that help create a more favorable financial future.  Many people may think that paying off charges every month and never borrowing  money is the key to a better financial future but, an excellent credit history is using credit wisely and avoiding common misconceptions about credit itself.  Pay your bills on time, review your credit report annually at annualcreditreport.com to determine if there are errors or any unpaid debts, and prove your ability to handle credit. Gulf Coast Educators also offers a financial wellness tool called SavvyMoney. This program gives your instant access to your credit score, credit report, personalized money-saving offers, and financial education tips.  Simply log in from your computer or mobile app and click “Launch SavvyMoney” to get started. These are all steps a person can take to ensure their credit score stays strong and healthy.

Information that is stored on a Credit Report

Positive information is saved on the credit report for 10 years from the date the account is closed. Negative information is saved on the credit report for 7 years from the date of the first delinquency that leads to the final default, charge off or foreclosure.  Below is a list of items that are most frequently asked about.

  1. Tax Liens, Financial Judgements and Chapter 13 Bankruptcy is stored for 7 years
  2. Chapter 7 Bankruptcy is stored for 10 years
  3. Unpaid Tax liens are stored indefinitely.
  4. Inquiries are stored for 2 years.

Obtaining a free copy of your credit report

The FCRA includes a “Fair Disclosure Rule” which requires each of the credit reporting agencies to provide consumers with a free copy of their credit report once every 12 months on request or if special circumstances arise.  Equifax, Transunion and Experian use a single point of contact for processing credit report requests.

Po Box 105281
Atlanta, GA 30348

A consumer can also receive a free credit report if once of these three situations occur.

  1. A company reports an action that has an adverse impact on your credit.
  2. You become unemployed (unemployed individuals can ask for a credit report if they plan to seek employment within 60 days)
  3. Identity Theft.

 

Read Part Two

 

Post author: Cathy Latiolais, Credit Manager

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.