1. Managing Your Credit
Presented By:
William Martinez, Small Business Counselor
San Diego Center for International Trade
Development

2. Understanding Your Credit Report
How often should you review your credit report?
– A credit report should be reviewed at least once per year through all 3 credit
bureaus
What’s in a Credit Report?
– Personal Identification Information: Name, Social Security Number,
Addresses (past and present), etc.
– Public-Record Information: Tax Liens, Judgements, Bankruptcies, Child
Support Orders, other official information
– Information on Each Credit Account: Open or closed, whom you owe, how
much you owe, how you’ve paid (current, 30, 60, or 90 days late), types of
accounts, monthly payments, credit limits, collections.
– Inquiries: A list of the companies that have requested your credit file
– Consumer Statement: An optional message that can be up to 100 words
explaining any extenuating circumstances for any negative information on your
report.
– Credit Score: It is optional and must be requested/ordered.

3. Understanding Your Credit Report
How long does information stay on your report?
– Positive information stays on your report forever!
Judgements 10 Years From Date Filed
Tax Liens 10 Years
Bankruptcy Information 10 Years
Most Accurate Negative
Information
7 Years
Inquiries 2 Years on Credit File
1 Year Affecting Credit

4. Dealing With Collection Agencies
Collection Agencies
• When a debtor defaults, creditors can either forward your debt to a collection
agency and agree to pay a percentage of the amount collected, or they can sell
the right to collect the debt to the agency, in which case the agency keeps
whatever it is able to collect.
• Most collection agents earn commissions, so they are highly motivated to get
you to pay.
• When you decide to talk to a collection agency, always remember that you are
dealing with a professional. Don’t let yourself get talked into paying more than
you can afford.
Creditor Tactics
There are many different tactics creditors can legally use to collect the money you
owe.
Your Rights
You have many rights provided by Federal, State, and Local laws in relation to debt
collection. Check your local laws at www.findlaw.com

5. Your FICO Score
• What is a FICO Score?
– Summary of all information on your credit report
– Predicts likelihood of your defaulting on a loan
– Range is from 300 - 850
• How your FICO Score is calculated

6. Five Parts to Your FICO
• Payment History – About 35% of your score
– Have you paid your credit accounts on time?
– Late payments, bankruptcies, and other negative information can hurt your score,
but a solid record of on-time payments helps your score.
• How Much You Owe – About 30% of your score
– The more you owe compared to your credit limit, the lower your score will be.
• Length of Credit History – About 15% of your score
– A longer credit history will increase your score, however, you can get a high score
with a short credit history if the rest of your credit report shows responsible credit
management.
• New Credit – About 10% of your score
– If you have applied for or opened new credit accounts, your credit score will weigh
this fact against the rest of you credit history.
– If you need a loan, do your rate shopping within a focused period of time, such as
30 days, to avoid lowering your FICO score
• Other Factors – About 10% of your score
– Having a mix of credit types – credit cards, installment loans, mortgage, etc. – can
add to your score

7. Interpreting Your FICO Score
Did you know that the average American credit score is
692? If YOUR score is lower, borrowing gets really tough.
What’s Your Score?
700 – 850 = Excellent – The best financing terms and represents the best score range
700 – 719 = Very Good – Qualifies to receive favorable financing
675 – 699 = Average – Will qualify for most loans
620 – 674 = Sub-prime – May qualify, but will pay higher interest
560 – 619 = Risky – Might have trouble getting a loan
500 – 559 = Very Risky – You need to work on improving your rating

8. Statute of Limitations
What is the Statute of Limitations (SOL)?
• Period of time that a creditor or collector can use the court (sue) to force
you to pay for a debt.
What is the period of time for SOL?
• The period starts on the account’s last date of activity
• The time period varies by state. California’s SOL is 4 years.
• Last date of activity can be found on your credit report.
Beware of Restarting SOL
• Anytime you take an action with an account, SOL is restarted
– Making a payment, making a promise of payment, entering a payment agreement, or making
a charge using the account can restart SOL
• When the clock restarts, it restarts at zero, no matter how much time has
elapsed

9. How To Play The Credit Game
• Shop in Sprees
– Lenders interpret frequent credit shopping as a sign of financial trouble
and you’re trying to borrow your way out.
– However, lenders assume that multiple requests during a tight time
frame are related to the same transaction.
• Save Old Accounts
– Lenders place importance on the length of your credit history.
– Even if you have not used a credit account in a long time, keep it open.
– Closing an old account can actually hurt your score, if the rest of the
accounts on your credit report are newer.

10. How To Play The Credit Game
• Say No to Retailers
– Many stores will offer discounts to consumers to persuade them to open
in-house credit cards.
– You may save some money, but will hurt your score in the process,
which could cost you more in the long run.
• Beware Transfers
– Balance Transfers can help lower your monthly payment, however, they
can hurt your FICO Score by increasing your credit utilization, a key
factor in determining your score.
– Example: If you owe $10,000 on four cards with a total credit limit of
$50,000, you are only utilizing 20% of your credit limit. If you transfer
that $10,000 to a single card with a limit of $12,500, your credit
utilization jumps to 80%.

11. FICO Tips
• Pay your bills on time. Delinquent payments and collections can have a
major impact on your FICO Score.
• If you have missed payments, get current and stay current. The longer
you pay your bills on time, the better your FICO Score
• Be aware that paying off a collection account, or closing an account
on you previously missed a payment, will not remove it from your
credit report. Your FICO Score will still consider this information because it
reflects your past credit pattern.
• Keep balances low on credit cards and other “revolving credit”. High
outstanding debt can affect your FICO Score.
• Pay off debt rather than moving it around. The most effective way to
improve your FICO is to pay down your revolving credit.

12. AnnualCreditReport.Com
• Gives you access to your credit report for free, once a
year, from all three credit bureaus.

13. Fraud Alert
If Your Identity Has Been Stolen
• Place a Fraud Alert on your credit reports and review all of them.
– Equifax: 1-888-766-0008
– Experian: 1-888-397-3742
– TransUnion: 1-800-680-7289
• Close Any Accounts that have been tampered with or opened
fraudulently.
– Include all accounts with banks, credit card companies, and other lenders.
– Ask creditor if they accept the ID Theft Affidavit
(http://www.ftc.gov/bcp/edu/resources/forms/affidavit.pdf)
– If your checks were stolen or misused, notify appropriate check verification
service.
• Telecheck: 1-800-710-9898
• Certegy: 1-800-437-5120
• International Check Services: 1-800-631-9656
• SCAN: 1-800-262-7771

14. Fraud Alert
If Your Identity Has Been Stolen - Continued
• File a Report With Your Local Police or the police where the identity theft
took place
• File a Complaint With The FTC: 1-877-IDTHEFT (438-4338) or write:
Identity Theft Clearinghouse, Federal Trade Commission, 600
Pennsylvania Avenue, NW, Washington, D.C.

15. Preventing Identity Theft
1. Place a password on your credit and bank cards. Don’t use available
information such as maiden name, last (4) digits of your Social Security
Number, or telephone numbers.
2. Secure personal information at home.
3. Shred your personal information, including junk mail, credit card offers,
etc.
4. Don’t carry your Social Security card with you.
5. Don’t give out personal information over the phone unless you initiated the
call.
6. Place your mail in a secure mailbox.
7. Monitor your account balances.
8. Read ALL your account statements, and look for unexplained charges or
withdrawals.

16. Sample Letters
• Refer to your packet for various sample letters for
managing your credit including:
– Request for Credit Report
– Unauthorized Credit Inquiry
– Failure to Respond to Deletion/Correction
– Bankruptcy Accounts Not Identified
– Additions to Credit Report
– Notice of Overdue Account
– Predatory Lending Complaint
– Debt Validation Letter
– Inaccurate Information Reported
– Proposal to Settle Account
– Deletions to Credit Report
– Reduced Payment Request

17. Request for Investigation
• If you feel that your credit report contains erroneous
information, you can dispute it by submitting a request
for investigation.
– Creditors have 30 days to respond to investigation requests.
– If a creditor fails to respond within the allowed time, the credit
bureau must remove the disputed item from your credit report.
• Refer to your packet for sample Request for
Investigation forms.
– You can also submit disputes online through
AnnualCreditReport.Com or the individual credit bureau
websites.

18. Credit After Foreclosure, Bankruptcy, or Short Sale
How long after Foreclosure, Bankruptcy, or Short Sale before you
can obtain credit to purchase a home?
According to Fannie Mae credit guidelines:
• Foreclosure
– 7 years from the date the foreclosure sale was completed as reported on the credit report or
foreclosure documents.
• Short Sale
– 2 years from the date the short sale was completed (limited to 80 percent loan-to-value)
– After 4 years, maximum loan-to-value increases to 90%
• Bankruptcy
– 4 years for Chapter 7 or 11
– 2 years for Chapter 13
Extenuating circumstances such as job layoff, divorce, medical bills, etc., which led to the foreclosure,
bankruptcy, or short sale, can reduce the time period.

19. Questions?