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Financial Health and Literacy with Mark Oliver

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Financial Health and Literacy

Collin Gabriel November 2, 2021

Mark Oliver (00:00:00):

Uh, hello everyone. My name is Mark Oliver and I work at metropolitan family service in the economic empowerment programs where I serve a couple of different roles. But I think the vast majority of my work is as a financial coach, um, specifically helping business owners with, um, building credits so that they can access capital to either expand or start up a new business. Um, I also am a certified student loan debt counselor, um, and that is obviously pretty related to credit and for a lot of people. Um, so we talked specifically about student loans, but also about any other sort of credit question that comes up. Um, a huge part of my role is really just helping people understand how the credit reporting system works in the United States and, um, and helping people navigate that and maximize their fight go score. And we’ll, we’ll talk what all that means.

Mark Oliver (00:00:57):

I guess that’s what the point of tonight’s meeting really is, is kind of an introduction to those topics. And, um, uh, as Joanie said, this is being recorded and we don’t want to share a lot of personal information, but we’ll have time at the end. That’s not recorded where you can ask more specific questions, um, that might, uh, address things that you want to talk about your own personal situation. So it’s nice to meet everyone. Um, thanks for coming tonight. And I’m going to start sharing that presentation here. Um, and definitely, I mean, asking for clarification is not in any way, like disruptive. So if you, if there’s some term or concept that somebody mentioned, um, that I’ve mentioned, feel free to ask questions, um, and what kind of generally stay on the topic of credit and loans and things of that nature. But, um, we would love as many questions as possible.

Mark Oliver (00:01:56):

I think these, these things work best as a conversation really. Um, I think you’re all pretty much experts in your own lives to a much greater degree than I ever possibly could be. So you, um, you’ll know what’s relevant to you as we go. Um, that said, um, we’re going to jump right into, uh, we use these words in many cases interchangeably when somebody asks somebody what their credit history or what their credit file is like, it’s, um, kind of a broad term that just mentions how credit has impacted your life in the past. Um, it feeds into two separate kind of technical terms, a credit report, and a credit score. Um, credit reports are actual documents that, that give, uh, a listing of how somebody’s credit history has, has gone in the past. And they usually include in them something that’s called a credit score, which is a three digit number in most cases, a three-digit number that is sort of a snapshot of how things are going at a certain moment in time. So if you have a number, a credit score, um, that tells you exactly what was going on at the moment that the credit score was obtained, um, and it changes in very short stretches of time. It can be different from week to week, from day to day, um, things of that nature.

Mark Oliver (00:03:44):

Now, the reason, so generally speaking credit is important, um, in a lot of different ways in this country. Um, but it mostly will increase the ability of somebody to access different options for improving their life or improving their life as a consumer in the United States, but also as a business owner. Um, when I say increasing access, it can give you options for better financial products. So more affordable loans. For example, um, rental housing though is also something so basic staple of life. Um, the ability to access rental housing is partially determined by someone’s credit score, a credit score being, uh, one of the factors that a landlord or a rental company would check into, um, if somebody applies for housing in a rental unit, it can also expand, uh, options when it comes to cell phone plans, uh, and utilities and insurance. So, uh, I think a lot of people don’t realize that their car insurance is at least partially determined by their credit history.

Mark Oliver (00:05:00):

So, uh, when I say that their car insurance, the price of the car insurance is partially determined. So you can, somebody with a low credit score can actually be paying more money for a car insurance or business liability insurance. Then they would then would somebody with a higher credit score. Of course, obviously those things are also, there are other factors that go into that. Like a driving history for car insurance is probably more important than, than credit score, but they’re all they all work together. Um, and in some places and in some jobs, uh, it can actually be a determining factor if somebody is applying for a job. Um, now the state of Oregon is limited in how, how much credit can, can be a factor in employment. So if you’re applying for most jobs in the state of Oregon, it’s illegal for, uh, for an employer to check your credit without your permission.

Mark Oliver (00:06:04):

Um, but for some jobs, jobs that have what they call fiduciary responsibility aspects. So if you’re applying for a job, let’s say in a bank as a bank teller, they’re going to have the right and the ability to check your credit score because you’ll be working with money. And, uh, your history with money is important to that job, but for most jobs, that’s not the case. Um, yeah, so it’s, it’s limited some states there’s no limit so you, anybody can check your credit. Uh, I believe in not going to name any states, cause I can’t, I don’t know, a hundred percent which states it is, but I know that a lot of Midwestern states will allow for credit checks on a job employment, a job applications, and a credit building is also something that helps people reduce their expenses. Um, in the sense that if you’re paying less money for car insurance and also for a car loan, then you’re saving money over time, just based on the fact that you have a good credit score.

Mark Oliver (00:07:19):

And I think I have a couple slides that kind of explain what I just said. Yeah, right here. This is, um, a depiction of the differences in costs for different loans, uh, actually for the same loan. So a $10,000 car loan with a five-year term. Uh, so a 60 month car loan for $10,000 and how much somebody with different credit scores will pay basically on those loans. So somebody with a 500 score, um, is usually going to be paying a higher interest rate and therefore a higher payment and paying over time based on that, a lot more money in interest and that’s, and you can see here that it’s a really big difference between 507 20, uh, seven 20. You’re probably going to in these days, you’d probably get a lower rate and 4.7% I would imagine, but it’s still the, it still works the same way in that this is one quarter of the amount of money, uh, over time and interest that you’re, that you’re spending. So it’s almost as if there’s a tax on having bad credit. I think that’s functionally the way it works here.

Mark Oliver (00:08:45):

And similarly, so yeah, the savings here is about $3,700 or five years, which is significant. I would say if we look at something bigger, a mortgage, now, I’m not sure in Oregon where you can get a $250,000 mortgage, uh, certainly not in the Portland area. So this might be a little dated, but it still works the same way. If it’s a, first of all, you’re not probably going to be approved from what most mortgages, if you have less than a six 20 FICO score, but six 20 it’s. Um, just the fact that the money that the numbers are so much larger, you’re actually saving closer to a hundred thousand dollars with just having a better credit score. Yeah. So in this case, $85,000 difference between the six 20 score and the seven 60 score, which is just huge. That’s an oops, that’s over 30 years too. So it’s not all at once. Um, so that’s a pretty strong argument I would say for have for, for credit building. Um, is this clear to everybody? Yeah, this

Joni McSpadden (00:10:08):

Looks good. One of the questions I have, and you may address this later is, um, like on your car insurance, if you’re paying that monthly, as opposed to paying it like twice a year or quarterly, does that help your credit score?

Mark Oliver (00:10:29):

Um, I don’t believe it would have any effect on your credit score actually. No, I don’t think so. I think you would probably save some money though. I mean, that’s the way my insurance works. I can opt between paying a monthly fee or a big lump sum for six months. And if I can afford the big lump sum, then I there’s a discount that’s applied. So I do save money that way, but I don’t think, yeah, I’m pretty sure that’s not, not going to affect your credit score. And the main reason for that is that, um, payments to insurance companies are not reported to credit bureaus. So you’re not going to see that type of activity on your, on a credit report. Um, but there are other types of reports. There are insurance usage reports. Um, I’ve actually helped people pull those before so they can see the insurance industry keeps, uh, they’re not credit reports, but their insurance reports on every consumer.

Mark Oliver (00:11:28):

So everybody can, um, access these reports just to see why they’re getting certain rates. Um, you can get some level of detail from that and everyone has the right to see those. I just, they’re harder to get because you actually have to contact the, uh, report company in writing. So you fill out a form, mail it to them. They typically don’t an online request method to do that. Um, it’s a little, it’s a little bit more inaccessible, but you still do have the right to do that. And for somebody who’s got, doesn’t really understand why they’re paying what they’re paying for insurance. That could be a really eye-opening thing. And also might be based on a radius information. I think that’s the biggest argument for looking at your credit report also is making sure that the information on the report is accurate and we will definitely be talking more about that, the ways to do that and why it’s a good idea.

Mark Oliver (00:12:33):

So in the sense that you’re saving money on loan payments, you’re actually, you’re, you’re saving money and you can actually use that money to build wealth, uh, that money can be applied in savings. It could be used for education for homeownership, um, things of that nature. So that’s how credit building has a direct connection to a family or an individual building wealth. And there is we, this is something I wanted to mention. Um, there are business credit reports for, um, for small businesses who are, um, using credit as a business, as a legal entity, similar to a person in us law. And, um, so a lot of businesses do have credit reports that track the businesses use for credit. Um, they generally are working in a very specific way so that if a business is, um, let’s say I use the example often of a restaurant business, a restaurant who let’s say is buying, uh, fresh ingredients from, uh, from a vendor on a monthly basis.

Mark Oliver (00:13:58):

So they get a, they get a monthly delivery or a weekly delivery, and then they get billed for that delivery and, um, business credit reports to track those types of transactions that are regular, uh, regular suppliers, regular vendors who are bringing food or some other, some other type of material that’s necessary for the business. That’s, what’s tracked typically in a business credit report. Um, so it would be less about credit cards and loans and more about vendor, supplier, relationships, billing relationships. Um, and yeah, we’ll talk a little bit more about this. I just wanted to make sure that this is, uh, something, if anyone has questions about this, if it sounds relevant to your business, we can definitely run through that a little bit. Um, I want to stress, however, that personal credit, if you’re starting a business, personal credit is, is a much more significant thing to think about. Um, because almost all business loans that a small business would use for a startup operation or for an expansion is going to be, it’s going to rely more on personal credit than it will on business credit. So it’s, uh, your, your personal credit is significant to this factor. Um, business credit cards, um, startup business loans from the SBA, that type of thing are going to be, those are gonna rely far more on your personal credit than on business credit.

Mark Oliver (00:15:41):

So the two work together. Now we do have, um, a credit jeopardy thing here. Um, I don’t know if everyone’s feeling this or not, but we’ll, we can give it a shot. This is more of a participatory thing just to identify truth or false hoods. As we go in along here, it’s going to put us populate this box, the big box in the middle with a statement, and then, um, you can vote myth or fact or truth or false, um, on this. Um, and statement number one here to evaluate is, uh, if you pay all your monthly bills on time, you will have a high credit score. Is that myth or fact in this case, what’s the jeopardy sound dude.

Mark Oliver (00:16:43):

Nice. I’ve seen some chat stuff here. Um, truth and myth. We’ve got an equal combination of both, which is nice. Okay. Well, the actual, I would S I would say that this is a myth, uh, because not all bills like, like we were talking about with insurance, not all bills actually even show up on a credit report. Um, so things like utility payments, if you pay your gas bill, typically that’s not information that will show up on the credit report. Usually rent payments are also don’t show up on a credit report. So you, you can pay all your bills on time and only some of them will be reported. Um, typically it’s going to be only bills that are related to debt. So if you’re making a credit card payment or paying on a car loan or on a student loan or something of that nature, then that is going to be reported. Um, now there are ways to get your rent payments to show up, um, on your credit report, that, that in fact is a, is a credit building strategy. Um, there are some private corporations, private companies that will allow individual renters to, um, report their own rent payments. Uh, there’s a company called [inaudible].

Mark Oliver (00:18:21):

We were just talking about this this morning, um, S S new S U I’m typing it in the chat box. That is something, if you were to Google that you’ll see that, um, uh, this is a service that’s available to everybody. If you’re paying rent, um, it’s something that could be beneficial in individual cases. Um, if you’ve been paying rent for a long time, for example, you can, uh, go into this starting account with this company and, um, they will, and then you can report your own rent payments to show up on your credit report. Um, so it’s a good way to show payment activity. That’s not tied to debt, it’s something you’re paying anyway, um, and use that to build credit. There also, this is something that happens a lot in some of the public housing in Portland, um, residents of home forward properties and, uh, PCRI properties. Uh, this is something that those, those agencies make available to their residents. So if you’re living in that type of public housing, it’s probably already happening. Um, in the case of the Susu, if your landlord is not participating in this, then an individual renter can do this. Um, they would just have to pay a, I believe it’s $50 per year. So you actually have to come up with 50 bucks to pay Susu that’s. This is their business model, and then they will report your rent as a rental payment.

Joni McSpadden (00:20:04):

So does that change, does will that change your credit score or does it just get reported?

Mark Oliver (00:20:12):

It should change a lot of people’s credit score. I mean, a lot of it depends on what’s actually on your report. So, um, for example, if somebody doesn’t have any type of active credit card or loan, this is something that could really benefit them because it would show, um, for this person, suddenly they’ll have an active account that’s on their credit report, that’s being reported and each payment will build your score. But if somebody already has a lot of credit for being reported, it might not make that big of a difference. So it’s probably case by case on whether or not this helps somebody. Um,

Guest Speaker (00:20:48):

When you, when you apply for that, does the landlord get notified as well?

Mark Oliver (00:20:56):

I, yeah, the landlord, the landlord, I read through this, this, this morning with a client actually, um, who was interested in this and they, we looked, um, and it does somehow involve the landlord. The landlord can actually choose to do this for their residents of their properties. So that’s one way this could happen in which case the, the renter doesn’t have to pay. Um, but if your landlord is not participating in it, then you can make the decision to do it yourself. And I do think somehow the, the, the landlord would somehow be involved. I’m not sure they’d either confirm the payments or something along those lines, but they wouldn’t have to pay to do it. So it’s a little there’s. I asked some questions about this. I looked on the website and they had a FAQ, a frequently asked questions, and that was one of the questions. And it did explain how, how that works. Um, but it’s an interesting idea and a possible way to build credit, which is nice. I have to close that. Okay, there we go. Okay. Let’s go to the next thing here. Uh, collection accounts collections are, um, bills that have gone unpaid for awhile. They’ll start being reported as collection accounts on a credit report. And the, the statement that we’re making here is that if you only have collection accounts on your credit report, it’s possible you won’t have a credit score. Do you think that’s a myth or fact, and you can feel free to ask a question about this too. And that’s,

Mark Oliver (00:22:46):

I’m seeing, um, seeing myth here. And the actual answer that I would give is that it’s fact, um, because I think everybody said myth in this case, so it’s not, um, it doesn’t seem to make sense, but the reason for this is that you can only build credit with an active account. Um, so that means an account. It means a number of different things, but one of the things it means is that it’s an account in good standing, um, that hasn’t gone to collections yet. So I, I do talk to a lot of people that only have collections on their credit report. And I’ve seen, yeah, I’ve seen those without scores because, um, you need to have something active and in good standing in order to, to build credit. Unfortunately, now the next one is, um, if you apply for a few new lines of credit, like making inquiries into credit, then you can ruin your score. And this is actually kind of a common question. So this is a, this is a good one to ask. So you can ruin your credit by applying for new lines of credit is the statement.

Mark Oliver (00:24:13):

And I’m getting facts mostly in response to that. And in one myth, and I would say the answer is mostly myth in this case. Um, the reason for that is that when it is true, that when you apply for credit, when you apply for like a credit card or alone, there will be a hard inquiry that that’s what they call it, a hard inquiry that affects your credits, where it makes it go down. Um, but that’s very temporary. Um, it, it only lasts for about six months, um, and definitely is completely gone after a year. So there’s no effect whatsoever. So it’s a very temporary thing. Um, that’s why I think they’re just saying that the word ruin is, um, tempered by the fact that it’s pretty short term. Um, and also if you’re, if you’re shopping around for loans, like let’s say, you’re, you’re trying to get a car loan, for example.

Mark Oliver (00:25:17):

Um, if you apply for a bunch of different car loans, let’s say from the dealership and from a credit union, from a bank, um, they’re all for the same purpose. So they only count as a single inquiry, uh, if they’re done within the same within, uh, uh, 14 days, two weeks. So if you do a bunch of inquiries at the same time for the same purpose, it only counts as one, um, because you really just shopping around, they allow you to shop around for the best rates. Um, so those two reasons it’s not really to ruining have your credit.

Mark Oliver (00:25:57):

Okay. Next one is, um, it’s possible to go from not having a score, to having a good score in six months. If you only have one loan that you pay on time each month, what do you think about that one? I see a, let’s see fact and myth equal equal measure here, and this, in this case, this one is definitely a fact, um, because, uh, it’s pretty easy to go from zero up to good, as long as you just start using credit. Um, I’ve worked with a lot of people. Um, I’d say immigrants commonly, or, you know, come to the United States as adults and don’t don’t have any kind of credit history. Um, and they take out one single credit card or one single loan just to build credit. And, um, within six months or a year, they’re up to almost 800, um, which is pretty high.

Mark Oliver (00:27:05):

That’s close to the maximum on a FICO score. So it’s pretty easy to get there, to get good if you have no history whatsoever, that also applies to, um, people who had just turning 18, um, young people who have never used credit before suddenly when they’re 18, they can start. And as long as they’re paying on time, it can go really well for them. And if you have bad credit, I see a question about that. If you, if depends, it really depends on what, what the factors are. That’s making your credit back, I think. Um, and we can talk about that. Some of those things, like if you have collections, for example, um, that typically something that’s really going to have a negative impact on your credit score. Um, but it’s possible those, those collections aren’t accurate. They might be something that shouldn’t be on there.

Mark Oliver (00:28:03):

Um, and it’s, if that’s the case, it can be pretty easy to have them removed. And, you know, within a couple of months of work and letter writing, you can actually fix things. So it is possible to go to a bid score and six months or a year, um, with bad credit. I think, um, the record of somebody that I’ve worked with is, um, about 200 points. Somebody added 200 points to their FICO score, and this has happened about twice. I wouldn’t say it’s every single time, but, um, it’s definitely happened where somebody boosted their score by 200 points within a year. Um, but mostly that was by taking inaccurate information, inaccurate, bad information off their reports, and then starting from scratch with something new.

Mark Oliver (00:28:55):

Um, so good question. Now, the last question on this slide is a single late payment can reduce a credit score by as much as 100 points. What do we think about that? Is that true or false myth and true, and fact, and myth, it’s a pretty, um, pretty, pretty good mix. And at least it feels like it’s, it feels like it is a true. And actually I would say that that is true. Um, and typically that’s going to be a specific case, like if somebody has really good credit and then what that saying, what a good credit score says is that you pay your bills on time. That’s one of the main things that it says, and if you don’t do that suddenly one month, then you’re going against the kind of computer algorithm that sets what a score is. So you’re, um, you’re, you’re going against what the prediction is. And that means that it drops by a lot more. So somebody with good credit who misses a payment, um, it drops a lot more than somebody with bad credit or with a lower credit score where the model says that this person misses payments sometimes. So it’s kind of a very specific thing.

Joni McSpadden (00:30:37):

Sounds like a catch 22. I mean,

Mark Oliver (00:30:41):

Yeah, yeah, it really does. And that’s, I think the main thing that we’ll talk about this pretty extensively today, or this evening, um, that late payments are the biggest thing. So paying on time is the biggest way to build your credit. Um, and obviously that’s not possible all the time, right? Like it depends on how much money you have and what your bill is.

Joni McSpadden (00:31:04):

If you, if you have like an unexpected events, such as like a hospitalization where that keeps you, takes you out of your game for, or out of your life, basically for a period of time, um, and you are missing like just miss one or two payments. Can you rectify that?

Mark Oliver (00:31:28):

Yes. I think you definitely can. I mean, a lot of, I think the key to that type of situation would be communicating with the lender and telling them what your situation is. Like, I just lost my job. Um, I don’t want to get behind on my payments, but I have less money now. So can we work out some kind of payment plan? Um, that, that would be the key before the fact it’s a little harder to fix something like that after the fact, but as it’s happening, you know, obviously it’s might not be possible. You might be too sick to actually make that call. Um, so it depends, I would say, but yes, I mean, that’s a lot, that’s the case in a lot of, um, with a lot of lenders that they’ll, they’ll understand and they’ll work with you, not everybody certainly, but yeah.

Mark Oliver (00:32:21):

Good questions. Um, here’s round two of credit jeopardy. Um, this is a, this will be a quick one. How many credit scores can one individual have? And the options are you can have one credit score, you know, three didn’t have around 20 or less than 20 or too many to count. What do you think about that? Seeing B’s and A’s and, um, so one or three, pretty much as the response and this one, the answer is, um, actually D um, I came up with a list at one point of at least 60 different there’s 60 different types of credit scores out there. It’s a really, really confusing thing. There are scores for bankruptcy risk. There are, um, each of the three credit bureaus, each has nine different models of FICO score. Um, and then there’s vantage score. If you’re familiar with credit karma, they don’t even use a FICO model. And we will talk, I mean, throwing around these terms right now, and I’ll, we’ll define them next. I think we’re going to go into those details, but the answer is that there’s a lot of different credit scores out there, unfortunately, um, it makes it really confusing, but it is true.

Mark Oliver (00:33:54):

And we have a lightning round. I’m not sure exactly what that means, but, um, this one, the five principle factors that influence a credit score. I don’t know where the five points comes from, but, um, what are the five principle factors that influence a credit score? Um, we’ve said a couple of them payment history that’s that will give you that one. Cause that’s a payment history is the number one thing. In fact, I’ll just give you all of them rather than ask you to type them into the chat box, um, amount owed. So, uh, that the term in the trade that’s used a lot is utilization rate. If, um, if you have a credit card that has a limit of a thousand dollars and you’re using $500 of that, then you have a 50% utilization rate. Um, and if you owe a lot on a card or max it out, then that affects your score.

Mark Oliver (00:35:02):

Also LinkedIn credit history. Like if, uh, if credit is new to you, then, um, it’s going to be having a count for a long time is something that helps your credit score. So having a credit card that you’ve used, um, for, you know, 20 years versus one year, uh, will make a difference on the same card. And also let’s see, this is, I can’t actually read the one under length of credit history, cause I’ve got everyone’s picture on the bottom. I have to move this new credit, um, applications for new credit. Um, do, we did mention this earlier that when you apply for new credit, there’s an inquiry, a hard inquiry that lowers your score temporarily. Um, so this is a small factor in your credit score and also a credit mix. Uh, so these are the five things now credit. And what we mean by credit mix is that you’re using different types of credit.

Mark Oliver (00:36:06):

Um, there are basically three different types of credit. One of them is called revolving. Um, that’s things like a credit card or a line of credit, uh, that you keep open. Even if there’s no balance it’s still open. And, um, you use it as you go and then pay it as you go. And it’s sort of a revolving, uh, life cycle of credit. So that’s one. Now the second type is installment loans. Um, that’s the term for that installment loans are things like student loans or car loans or personal loans from a bank that are for a fixed amount of money. Um, and then once you pay it off, it’s not active anymore. So it’s different than revolving loans. And then the third category of, uh, that fits into the credit mix is the home loans, any type of home loan, since it’s for such a large amount of money that is treated differently, even though it’s kind of like an installment loan in most cases, a mortgage, because it’s for a fixed amount of money, you pay it off and then it’s not active.

Mark Oliver (00:37:22):

Um, it’s just because it’s a tied to home ownership that, that it’s a different and some home loans are actually revolving, um, their home equity lines of credit, uh, that people can take out to put a new roof on their house that, uh, keep it open for a long time. So you can, uh, put a new roof on and then keep that open and then use it to do landscaping or something along those lines. That’s actually a revolving type, but since home loans are so, um, different and specific than they’re the third type of credit, really. So those five things are really all you have to think about now, which of those factors has the strongest influence on your score? We did already say this one, hang on time is correct. Thank you for that. Awesome. You guys. Thanks for, thanks for playing. I wish we had prizes, but unfortunately I don’t even know how we would do that, but payment history is the number one factor.

Mark Oliver (00:38:37):

Um, so let’s look at the details. I’ve thrown around a lot of terms here and let’s try to make sure they all get defined, um, as we go, um, there are all sorts of different and while we’re using the term players here, um, I guess, uh, I don’t know if I would really describe this as a game so much as a, um, but uh, sort of an ecosystem. Um, so these are all the different entities that exist in the credit world, but the consumers in the middle of the people that are, um, trying to live their lives, um, are affected by the things in the outer ring. And that includes over here on the left credit score, developers, the people that invented credit scores and the consumer reporting agencies that track people’s use of credit. Um, they actually buy credit scores from the credit score developers. So when we use the word phyco, uh, the reason we use that word is because it was invented by a company called the fair Isaac corporation, um, and fair Isaac corporation sells its score to the credit reporting agencies and lenders will report to the consumer reporting agencies. So that’s where the information comes from. They, they report and then the government regulates these things to a greater or lesser, mostly a lesser degree. They regulate, uh, how lenders report and they also regulate credit score. Um, and the consumer reporting agency to a certain degree.

Mark Oliver (00:40:25):

Um, when we S we use the word credit reporting agencies or consumer reporting agencies see are a, there are three big ones. There are actually quite a few, uh, on top of that, but there are three companies that you should probably know about when it comes to credit, and those are Equifax Experian, and then TransUnion the names of the companies. So all three of those companies keep reports, um, on every individual consumer in the United States. And then, um, that’s who you’re looking at. When you say I’m looking at my credit report, you’re looking at a TransUnion or Experian or Equifax report usually.

Mark Oliver (00:41:09):

And, um, the credit basics, this is a repeat of a slide earlier, uh, in your credit history consists of your credit report and your credit score together. Um, and in every credit report, what you’re going to see is four different sections. Um, the first being personal identifying information, like your name and date of birth and social security number and address maybe a little bit of information about your employment history, but not very much, usually just a couple of jobs will be listed there, things that identify you as an individual consumer. Um, the next, the, probably the biggest part of every credit report is the credit history. Um, and that’s tracking your payments on individual accounts. So, um, credit cards, um, if you’re using rent reporting that would show up in the credit history area and, uh, payments on car loans, for example, all three of those things would be in your credit history.

Mark Oliver (00:42:19):

And then there’s a section for public records, which, um, at this point in time, that would only include, um, bankruptcies. So if you’ve, if you filed for bankruptcy, any kind of bankruptcy, that’s where it will show up as in the public record section. And finally, there’s a section of a credit report that lists inquiries. Um, and that word is, um, I’ve used that a few times, but an inquiry is when somebody looks at your credit report, it has to show up as an inquiry on your credit report. When I, so I work as a credit coach, I pull people’s credit reports all the time. Um, I do it differently than if it’s tied to a, an application for credit, um, applications for credit or hard inquiries, which do affect your score. Um, when I do it, it’s an educational inquiry and it doesn’t, it doesn’t have any impact on the score whatsoever.

Mark Oliver (00:43:21):

It’s just, uh, it should, it’ll still show up on your file that mark, that metropolitan family service pulled your credit report, but it doesn’t affect your score in any way, but you can look and see all the companies that have requested your credit report in the inquiry section, which is always interesting. Um, usually that’s going to be an insurance company or credit creditor, or, um, it could be someone who’s trying to sell you something like, um, well insurance company or a phone provider, utility provider. They can typically pull your credit reports to that type of thing, or also if you pull your own credit report, um, and we’ll definitely be showing you how to do that. That’ll show up in there too. So all, all, all inquiries will show up.

Joni McSpadden (00:44:17):

So mark, here’s a couple of questions. One is, are lenders required to report? Not why do they,

Mark Oliver (00:44:28):

Oh, I see lenders are not required to report, um, anything really. So, uh, and there are some lenders that almost never report like, uh, payday lenders. Uh, if you go to CashCo for the most, well CashCo sometimes does report, let’s say rapid cash. I’ve never seen rapid cash report, anything, um, which is kind of bad if you, um, if you’re using a rapid cash regularly and paying it on time, they’re not reporting it should w would be an opportunity to build credit if they report it. Um, but why do they, why do, why do companies report?

Mark Oliver (00:45:17):

That’s a really, really good question. I think, um, there’s no legal requirement for, for a company to report information. So if you have a student loan, uh, but if you, but most, most creditors do report, um, in, in the case of something like a credit union or a non-profit lender, they report in order to basically give people an opportunity to build credit. So they have a mission to help their all credit unions have a mission to, to help their members financially. And reporting is mostly going to help people it’s. But if it’s an on-time payment, um, why does a hard inquiry effective score and not a soft it’s just because it’s tied to an application for credit? I don’t think I answered the first question very well. I mostly, I mostly don’t even have an answer to that question. There are plenty of lenders that don’t report at all.

Mark Oliver (00:46:22):

Um, but there are some that do most, do most do like car loans will show up there. Um, they might not do it monthly. They might do it quarterly. Um, one of the, one of the factors in reporting is that a company has to pay in order to report. So if it’s sort of a fly by night company, um, that’s not reputable, they don’t report it all, but the more reputable companies will, it’s not a good answer to why though. I’m going to ask that question to some other people, I think, thank you for asking that, Carrie. I really appreciate that question. It’s making me think. I’m sorry. I don’t have a better answer for you. Um,

Joni McSpadden (00:47:12):

Yeah, it’s always a good idea to make the teacher as to think.

Mark Oliver (00:47:16):

Yeah, it helps. It helps. It does. Um, I like the fact that I can still sort of think at seven o’clock at night, it’s good, but not, I’m not doing great. Um, now the heart inquiry question, I do have an answer for like, why does a hard inquiry affect a score and not a soft? And it’s purely because, um, if it’s tied to an application for credit, then it, the way the system works is that it affects your score. I mean, that’s, that’s um, and the, the motivation for that is that if somebody’s going around and applying for a bunch of loans, then the score goes down because they look, um, riskier, you look riskier and that’s what the score is reflecting. So if you’re, if you’re applying for a car loan and applying for credit card, all a bunch of them in a, let’s say a six month period, then the borrower looks sort of desperate or maybe in a situation that might not lead to repayment. And that’s what a score. The bottom line of a score is that it tells a lender how likely someone is to repay their debts. Um, really now the educational inquiry is, is an exception to that. So most, most inquiries, um, that I, all of the ones that I do are an exception to that because you’re not applying for credit. You’re just trying to learn what your score is when you can, when you come talk to me. So that that’s probably a little bit better answer.

Mark Oliver (00:48:52):

Now, the details of personal identifying information, um, we kind of already went through this. It’s pretty limited. It’s just your name, address, social date of birth, a little bit about employment history. Um, not much. There really, it’s a really short section, but it’s important to look at because if you see something like an address that you’ve never used before, or a name that’s not yours, it could reflect the fact that there’s been identity theft in your, um, in your file. So somebody has maybe used a different address and your name to apply for credit. They got ahold of your social security number or something like that. And that’s unfortunately a really common thing. Um, and also, uh, I would say, just add to this, that people, without social security numbers, if someone doesn’t have one, um, then there’s much more risk of identity problems or mismatched files because that’s a 10 digit number. It’s very specific number. So without that number, you’re only relying on the spelling of a name and address and maybe a date of birth. So it’s much easier even just for two people with similar names, um, that maybe don’t have a social security number to have their information mixed up on a single report. Um, that’s actually pretty common. So the argument here is that you should take a look at your credit report and make sure that everything is accurate credit information, but also your personal identifying information.

Mark Oliver (00:50:33):

And when it comes to credit history, it’s, um, this stuff, uh, open trade lines, straight lines is just a word for accounts. So they have open accounts that you have active accounts that you have, and then derogatory items or negative information such as late payments and collections. And they’re usually in their own special category, but your use of credit is really what’s reflected in this section and public records. Um, that would be bankruptcies, um, up until 2018. There could be one other thing on there that were, uh, judgments, a small claims court judgements. So if a creditor sued somebody for nonpayment of debt and came after you through the courts, then that would show up there. But the law changed on that nationwide in 2018. And that was no longer something that can show up on credit reports. Um, it can be useful to get that information.

Mark Oliver (00:51:39):

Like if you don’t many people don’t know that they’ve been sued. Um, and there is a way you can go to the Oregon judicial department in this state and, um, look, look up your name, uh, through [inaudible], uh, smart search for free and look and see if you’ve been sued. Um, some cases people have found out that they’d been sued just by doing that stuff. Um, you’ll also see things like, um, you know, family court, bankruptcy court, like any, any type of court action. It could be parking tickets. That’s what I see a lot. When I look at my name, um, a lot of parking tickets and speeding tickets and things like that. So any court action will show up in this.

Joni McSpadden (00:52:25):

How long, how long do, like say a bankruptcy? How, how long does that stay on your credit report or does it ever go away?

Mark Oliver (00:52:36):

Well, there are different types of bankruptcies. Um, and they’re the two most common for, uh, for consumers are chapter seven and chapter 13, and a chapter seven bankruptcy will stay on for 10 years from the filing date. So the date it was filed in court 10 years later is when it comes off and it does come off completely, but 10 years is a long time. That’s actually the longest time frame for something to stay on your credit report. Um, uh, chapter 13, that’s a different type of bankruptcy. That’s when you’re, I’m making some payments on the, not necessarily closing everything, I’m making some payments, those stay on for seven years, chapter 13. So

Joni McSpadden (00:53:25):

Do they stay in your file even though it’s not showing as like active on your rig on your credit report,

Mark Oliver (00:53:34):

It will still show up in the, in the state Oregon judicial department, uh, records from, you know, from forever ago. Um, there’s stuff on, you know, if you look at the OGD website, you can see stuff from 30 years ago, um, unless you go to the court and, um, have you record, um, have something removed from your record, then they’ll stop reporting it on that website. Yeah. Um, and then obviously criminal things would have to be expunged. You’d have to go through the process of expungement, but that’s possible with, with legal help. And, um, in Oregon, uh, the Multnomah county defender’s office will, uh, help people with that from time to time with expungement. Uh, they have expungement clinics actually where the, where there’ll be lawyers there to help people wipe stuff off their records. And, um, I don’t know if you’re all familiar with, uh, Rosewood initiative.

Mark Oliver (00:54:36):

It’s, um, it’s a service, a social service agency on 160 second and stark, um, Rosewood. Well, before the pandemic, they were doing regular, um, expungement clinics, but also, um, helping people get rid of fines, uh, traffic related, fines and fees. Um, they’d have a judge go out there to the office and basically it turned into a courtroom and you could do your community service right there, like help, uh, help out at Rosewood initiative. And you just needed to do like one hour of community service or volunteer service at Rosewood. And it would wipe out a hundred dollars in fines right there. Uh, it’s a pretty amazing thing. And I’m pretty sure that’ll start up again, as soon as the, well, whenever the pandemic is more in control, um, that we’ll be back. I think they have been doing it during the pandemic too. It’s um, it’s just more of a lottery system. Like you have to sign up online. You obviously don’t go anywhere. You just, um, they pull your name out of a lottery. So it’s not quite as, I don’t know, it’s not quite as fair. I think like you can just, basically, they’re kind of gambling that you can get this done, but it is something that still exists and hopefully it will work better after we can go back to in-person and stuff.

Mark Oliver (00:55:57):

And then inquiries is only going to be soft and hard inquiries. Um, people looking at your credit report, this information also is, is only on there for two years. So inquiries don’t show up for longer than two years. They’re they’re off pretty quickly. Um, when it comes to increase soft and hard inquiries, um, these are initiated when a consumer applies for credit, so hard inquiries. Like I said, they’re only tied to credit. They, um, if they’ve happened in the last 12 months, they can impact your score. Um, the first six months it’s a bigger impact. And then after six months, it kind of lessens. So your score goes up, but still is affected by it.

Mark Oliver (00:56:43):

Um, soft inquiries. They, all of them only stroke 24 months and soft inquiries, like we’ve said, have no impact on this credit score. Um, they’re going to be initiated either by a consumer or by some businesses like ours for educational purposes. So they’re pretty, they’re pretty simple and straightforward and say, um, and here’s an important fact that you, I don’t know if anyone’s ever pulled their own credit report before, but you definitely have the right to do so, uh, one from each credit bureau for each year. Um, and this is actually a little bit antique this information because, um, during the pandemic, the credit is to have opened that up a little bit. So you could do one a week from each credit bureau. So you can do, if you want it to, you can do a weekly right now. Um, and that’s still the case.

Mark Oliver (00:57:42):

Um, if you’re ever denied alone or if you get bad terms, like a high interest rate, because of negative information on your credit report, you have a right to get a copy of that report. Um, and you also have the right to dispute information that you believe is incorrect with credit bureaus. Um, and finally, if something is, if a dispute goes through, you have a, a right to the new free copy of a credit report that shows that that has been removed. Um, so these are, these are cases where you have the right to a credit report. And, um, this is the website. If you’re interested in looking at your own, you can go to annual credit Uh, you basically just type your name in, um, pick one of these companies or all three, if you want it to Experian, TransUnion, Equifax, and, um, give them your name, social security number and address, and then answer some questions just to prove your identity.

Mark Oliver (00:58:49):

So they might ask questions about certain loans you’ve had. Um, the back, we have an example of those questions coming up here, I’ll show you those. Um, but you can also, um, get referred. So I know that at least one of you has worked with one of my colleagues at MFS, um, as a referral, um, and that’s available, I think to everyone at ONAP, um, everyone who’s a no-knock client and also anyone who’s in the IB RN program as a business owner can come work with me by referral from Joni. And I can just get a copy of your credit report for you, so you don’t have to do it yourself. Um, and we’ll sit and go through it.

Mark Oliver (00:59:33):

Um, here’s some of the security question, examples, like what county did you live in, in 28, 2015? If you can remember that this can be kind of the tricky part sometimes is if you’ve lived in a lot of different places in a certain year, maybe you don’t remember what county or they might ask you questions about your phone number from 20 years ago. And that’s especially hard. Like, I can’t answer those. Um, but one question is, uh, this is a common one. You may have an opened an auto loan in March of 2018. Who’s the lender for this loan, or what is the monthly payment for this loan, that type of thing, but barring that part and you can actually confirm your identity. And, um, if you’re unable to, because you can’t answer one of the questions, there is a way to mail in a form, and then they’ll mail you a copy of your credit report.

Mark Oliver (01:00:27):

So that’s an option too. It just takes about two weeks instead of being instantaneous. So, but I don’t know, I do this pretty regularly just to make sure that there’s no identity theft going on in my file and, um, make sure things are going okay really, but annual credit is the website. So there’s no other websites that are set up. This was, uh, set up by order of the federal government to, uh, it mandated that all the, all of the credit bureaus give access to your report. And this is the way they, they worked at now. One thing you’ll notice if you do this, is that, wait, I think there’s a question. How would I know what type this is a question from a while ago? Sorry, shack. Um, I just noticed the question from probably about five or six minutes ago. Sorry about that. Um, how would I know what type it is? Can I ask, I don’t know what that refers to. Maybe you done at this point,

Guest Speaker (01:01:34):

Joni said to rephrase it. It’s just basically understanding where my credit gets pulled. Um, if it will be hard or soft, because then if it’s hard, like you said, it’s going to affect my credit.

Mark Oliver (01:01:48):

Yeah. It tells you on those reports on those consumer reports, it’ll tell you what type of inquiry it is. I think it’s the, usually the top section is for, they don’t use the word hard inquiry, but they say, um, related to application for credit or something along those lines. So they explain it pretty well. And then there’s educational inquiries in a separate category. So it’ll tell you which ones, which basically does, does that answer your question?

Guest Speaker (01:02:21):

Yeah. Okay. Not really, but yeah. Now, um,

Mark Oliver (01:02:26):

Oh, let’s no, let’s, let’s do it. Let’s do answer your question. I should, I should be able to know.

Guest Speaker (01:02:31):

I meant like, so if I go and apply for a car loan, does the dealership make mention of that? And if I go to like, fix my credit, are you going to say, Hey, we’re doing a soft pool. So depending on what kind of, um, what the credit report is is for just knowing if it’s soft or hard, um, is helpful, I guess, if that makes sense.

Mark Oliver (01:02:54):

Okay. Yeah. Yeah. Usually when somebody’s pulling your report, the computer system asks. So w when I do it, it says, what’s the purpose of this, of this inquiry. And I’ll say it’s educational. Um, that’s the only answer I ever give, because I don’t give loans. So, um, um, but if, uh, if, uh, Carla, if a, let’s say a car lot is doing it, they are required to say that it’s for an application for credit. Um, so that would be the difference there it’s, it’s, it could be that someone does it wrong and makes it a soft inquiry accidentally, but I don’t think I’ve ever seen that happen. Um, it’s usually pretty easy to get that, right. Yeah.

Mark Oliver (01:03:38):

And, um, so one thing you’ll notice if you do pull your own credit report from that annual credit is that it doesn’t have a score. Um, and that’s really just because the federal law that was set up in 2005, either forgot to mention that or skipped it on purpose, probably skipped it on purpose. So there’s no credit score on those consumer credit reports. Um, when I do it, the reports I get will give you your credit score, but obviously there are ways to get your score with these free credit score platforms like credit karma, There are a bunch of those, um, that will give you a free credit score these days. Um, also if you, if you have an account with certain banks like capital one, we’ll give you your credit score. Bank of America will give you your credit score once a month, that type of thing.

Mark Oliver (01:04:36):

So there, there are ways to get that information, um, the benefits of that or that, yeah, I mean, you get a free credit score. That’s great. Um, it oftentimes comes with recommendations on how to improve your credit score. So credit karma is really good about that. They’ll tell you, um, you know, this is what happened, this is how to fix it. Um, so it’s kind of a coaching tool. Like you can use that as a tool. Um, the downside though, is that it might be a different score. Um, the, in the case of credit karma, they’re not giving you the same score that most use. They’re giving you something called a vantage score, which is similar, but not exactly the same. And they’re not always very clear about what score they’re giving you. They sometimes they don’t even say they just give you the three digit number and they don’t tell you what it actually means until you go through and read the fine print.

Mark Oliver (01:05:36):

Um, they can be really tough if someone doesn’t have a social security number, or if they, um, uh, have some difficulty answering questions like remembering what county you lived in, or, or what’s your phone number was in 1998. It might be problematic to get access to this. Um, and also you have to share your personal information with these companies that are providing a score in the first place. So like who runs credit karma? What do they do with your information? I don’t know, it’s a private company. They don’t really disclose what they do with that. Um, I think if you use credit karma, you’ll notice that you start getting ads for, for loans and for credit cards. I think they sell it for one thing. They sell it to other companies, um, which might be a good thing. It might be a bad thing, but I guess if you, if you’re looking for a loan, um, and you get something through that, then it’s probably a good thing, but just having your personal information out there, I think all of us have learned is, is not necessarily a good thing, right?

Mark Oliver (01:06:42):

There’s um, at least half of the United States have had their information compromised by hackers at this point now probably more than half. Um, and it could be used to, to commit crimes like personal identity theft against you. Um, so these are considerations for using some of those platforms, not something you have to worry about with annual credit, but with credit karma or or any other company that’s promising you information, um, they’re obviously profiting from your information on some level. So something to consider now, when it comes to score range, I probably should make this a little bit earlier, cause we’ve been talking about credit scores a long time. Um, when it comes to a FICO score, the numbers range between 300 to eight 50, approximately, um, and the lower the score basically means somebody is poor credit or low credit or bad credit, whatever, whatever phrase you want to use.

Mark Oliver (01:07:50):

Whereas these numbers around 600 can be, um, fair or near prime or, um, growing that’s a, that’s a term sometimes people use and then there’s good or excellent credit. So they kind of break it down to the different tiers. Um, somebody on the right side with an eight 50 score is going to get the very best possible rates and terms on loans. Um, easier access to rental housing because of a good score. And they’re just going to be viewed as low risk borrowers. Really. That’s kind of the bottom line. Whereas somebody with a lower score is viewed as higher risk, um, and might not be able to access a lot of, um, quality loans. I’d say, um, when you get to the 6 26 46 50 range, then you can start talking about mortgages, for example, um, you can also start getting better interest rates on things like car loans.

Mark Oliver (01:08:53):

Um, so I know quite we have a car loan program at our agency actually, um, called ways to work. And if somebody comes in, uh, it basically is it’s a car loan for people that are having trouble accessing affordable loans. Um, so I don’t know if everyone’s familiar with United credit, reliable credit, United finance and reliable credit. There, there are two car lenders in the Portland Milwaukee area that make what they call subprime car loans. Um, so that means they have pretty high interest rates. Um, the maximum interest rate in the state of Oregon that’s allowable by law is 36% interest, which is really, really high and really tough to pay. Um, but that’s oftentimes what you’re going to get from United credit or reliable United financial reliable credit. Um, and what we can do in our, uh, waste to work program is refinance those loans at 8% interest. Um, but if somebody comes in and they have a score of six 50, they’re probably going to do better than 8% interest on a car loan. So that’s, this is a useful thing for our, for our people to know too, because, um, we might just tell someone to, you know, forget about the program. You could just go to a credit union and get 4% interest rate at six 50 or something along those lines.

Mark Oliver (01:10:26):

Um, so useful thing to, to think about there. I think there’s a question. It could be an old one. Let me, let me look. Oh, no, it’s a thank you from Shaq. You’re very welcome. It’s from five minutes ago, 10 minutes ago. And I got to, I need a bigger red button that says, somebody said something.

Joni McSpadden (01:10:49):

I do have a question. So it is six 50, sort of like one of the, I dunno, benchmarks, is it, or between fair credit and good to excellent credit. And

Mark Oliver (01:11:06):

It is a number that’s oftentimes used for that. Yeah. And I would say in our case, it mostly like if somebody has six 50 and they go to a credit union and they said, you know, they tell them 10%, then they could still come back to us. Um, it’s just kind of a rule of thumb that often seems to work, but not for everybody because there can be other factors too, like income, uh, loans. When you’re talking to a lender, this is all a big part of that, of your application for a loan, but there are other things too, like income, if your income is really low, um, they want to know that you’re able to afford the loan that you’re taking out. And if your income seems to show that you can’t do that, then that could be a bigger factor than credit score. Um, so yeah, it’s kind of variable, but that, that’s a really good question. I think 6 46 50 is kind of a dividing line. Um, it’s not really a question of judgment, but it just seems to work out that way when it comes to mortgage lenders and, and, uh, certain car lenders. Definitely. Good question.

Mark Oliver (01:12:18):

And, um, somebody who’s unscored unscored borrowers, um, somebody who doesn’t have a credit score at all is really, um, well, it can be different cases. It could be a young person who’s just never used credit or someone who’s new in the country or someone who’s just never wanted to use credit. My grandfather said, uh, he was one of those people and he said, don’t ever don’t ever borrow for what you can pay for yourself or something like that. I’m pretty sure he lived his entire life without ever taking out any kind of loan. Um, so he probably had no credit score would be my guess. Um, but if somebody started using credit recently, that can be a case to, or, um, if they’ve used credit in the past and then stop using it, your score can disappear. In fact, it can go away pretty quickly if you have no active credit on your file, um, your sport can disappear after six months of not using any kind of credit.

Mark Oliver (01:13:17):

Um, but then return as you start using any of that. Um, but the bad news on that is that it’s similar to having bad credit. Um, you’re going to have to pay more for loans and things like that. So, um, now when it comes to which score am I looking at, that’s a tough, that’s a tough question because any credit report or any score that’s given you is going to be a very specific thing. Um, and there are different credit scores designed for different lending purposes. So the scores, uh, w when I pull somebody’s credit report on, um, TransUnion or Experian, we get what’s called the FICO model for, um, so it’s an older, like even 12 to 15 years old type of score. That’s specifically still use pretty heavily by the mortgage industry, but it could be very different than what you’re seeing on credit karma or what you’re seeing from capital one on your, on your billing statement monthly, because they’re using a different score entirely.

Mark Oliver (01:14:29):

So what you’re looking at, um, if it’s not explained very well, it can be kind of confusing. Um, so ask questions, I guess, if you look at, if you’re a bank of America card holder, they give you the FICO model nine, which is the most recent FICO score. And that one is used mostly by the credit card industry. So, but if you don’t know that, I mean, they’re all just sort of a ballpark figure anyway, generated by a computer, um, that doesn’t have a lot of meaning outside of the context of what you’re using it for. So if you’re, um, since I use the same reports every time with somebody, then I can look and see how much your score increases over time. That’s the main reason we do it. Uh, and then we report that to our funder, um, and say, Hey, this is working. This person had a 200 point jump in their score. Um, but yeah, it’s, it is important to know what you’re actually looking at.

Mark Oliver (01:15:35):

Um, so breaking it down between phyco, the fair Isaac corporation advantage score, um, FICO scores are far more commonly used by lenders. Although vantage score is picking up, um, basically FICO scores were the first credit scores. Um, and they’ve been, yeah, they’ve been in development for almost 30 years at this point. And, um, the reason vantage score exists is because, um, this was invented by the credit bureaus because they had to pay FICO for the score and they didn’t want to do that because it cut into their bottom line. So they invented their own scoring system called vantage score, and they wouldn’t have to buy the FICO score. That’s the whole reason and vantage. And that would really what that resulted in is confusion, because now there’s just so many, um, so many different scores out there. Um, but I’m pretty sure that corporations don’t care that they’ve caused confusion. That would be my guess, but it is important to know which one you’re looking at.

Mark Oliver (01:16:44):

Um, this is the way when we talked about those five factors that contribute to your score, this is kind of the way it breaks down. Um, they often show a FICA score. The payment history, 35% of your score comes from your payment history. 30% comes from the amounts owed. So that’s over half of the contributing factors of your score. And then these smaller things like the credit mix using installment using, uh, revolving lines of credit length of credit history is pretty big factor too. So I’m having accounts that have been in good standing for a long time. Um, that’s, that’s the argument for using a credit card really, because that’s something you can keep open for decades if you want to. Um, and the longer you keep something open, the more it helps you score, um, that type of thing. So this is the way all of those things don’t have an equal contributing factor to what your score is. Um, payment history is number one, for sure.

Mark Oliver (01:17:48):

And when it comes to vantage score, it’s very similar, um, payment history is what they call the, these charts come from the score developers. So this is advantage scores, official explanation of how this works, um, extremely influential payment history. So that looks pretty similar to the FICO score, right? And then age and type of credit. And, um, how much is used is in the highly influential category. And then total balances is moderately influential. And then how much available credit you have and recent inquiries and recent credit behavior is, um, part of it too. So they basically work the exact same way, but they come up with a slightly different number because the algorithm, the formula they use to calculate it is different.

Mark Oliver (01:18:44):

Um, the payment history, um, somebody with a strong credit profile is someone who pays on time. Every time a single missed payment can have a huge impact and huge negative impact, and someone who doesn’t have any serious delinquencies. Oops, I’m to go back. There we go. Serious delinquencies are, uh, a term that refers to a payment that’s at least 60 days late. Um, so if you’re 60 days late, it counts. It’s more, it’s more negative than being 30 days late basically, but somebody who is regularly using credit typically, um, has a lot of practice. And, um, isn’t missing payments really. So this is what payment history looks like. Um, outstanding debt, the lower your balances are the better. Um, and that’s pretty specific like if you have a credit card and, uh, let’s say I’m gonna use the example of $1,000 limit. If you’re, um, if you’re using 50% of your credit, then, um, you have a $500 balance.

Mark Oliver (01:20:00):

But if you’re using less than that, let’s say $10. Then you have a really low utilization rates. So the person with a $10 balance is going to have a higher score that somebody with a $500 balance, um, the advice, a lot of times, if somebody is applying for a mortgage, they will, the advice from the mortgage lender is to pay off your credit cards before you apply for the mortgage. Um, just for this reason, it’ll make your score go up. So that’s something you, you know, there are months when you can’t control that, but with the months that you can, if you’re about to apply for a business loan, for example, then you should try to pay down your balances as much as possible and not max them out, max them out just means you’re using, um, you know, 90%, 95% or a hundred percent of your available credit and, um, the lower, the better, I mean, there’s no, there’s no, um, there’s no, it’s pretty simple. Like the lower, the better, the more positive impact on your score.

Mark Oliver (01:21:13):

Um, this is a case of somebody Ruby, okay. This is someone we’ve never met named Ruby who, um, this is the way her outstanding bet dead pencils out. Um, looks like she has three credit cards. One that has a limit of $1,000, one that has a limit of $2,500 and another one with $2,500. So these two, so altogether that’s $6,000 of available and she has the balance on the green one or $500 on the orange. One is 1500 and then $0 balance on this one. Um, a common question for somebody that comes to talk to me is like, Hey, I kind of have too many cards. I’d like to close one of them, which one should I close? Um, there are a number of different factors to making that decision. Um, but one of them is, um, how it’s going to affect your credit utilization rate. And that’s what this, that’s what this drawing is going to show us. Um, now, if Ruby currently, what is her utilization rate? Well, I’m going to have to do this in my head.

Mark Oliver (01:22:28):

She has a available credit of 6,000 and a balance of 2000. That means your utilization rate is 33%. That’s what I’m going to say. Oh, they’re saying 30. That’s not right. It’s actually 33, but whatever, close enough. Now let’s say she closes one of these. She closes the one that she’s not using. What’s our utilization rate now. Um, she has a limit of 1000 plus 2,500, so 3,000 and a balance of 2000 still, but I can’t do that on my head. The thing I have this little calculator here, 2000, let me say 3,500, that makes it a 57% utilization rate. Um, so if she closes this one blue card, um, it might be what she wants to do for other reasons, but it is going to affect her credit score. Her credit score is going to go down some, um, because her utilization rate has gone up. Um, does that make sense to everybody

Joni McSpadden (01:23:52):

More if I just wanted to make you aware of the time we’ve only got about 30 minutes left.

Mark Oliver (01:23:57):

Okay. That’s actually a good reminder. I’ve got a little clock here. Um, yeah, it’s about 22 minutes at this point. Um, I’m wondering if we should stop for questions now just to make sure, just check in and see if there’s any questions. And if there are, maybe we could stop recording. I don’t know if we’ll have 20 minutes worth of questions, but, or do you want to hold off for another five minutes?

Joni McSpadden (01:24:23):

How much more of your presentation do you have?

Mark Oliver (01:24:26):

What I have the rest of this is going to be more details about this kind of stuff. And, you know, I don’t know how useful that actually is. If there are questions, those could be much more useful. What I can do is show you, um, like we’re just going through the details of how the score is affected by certain things right now, which is kind of useful. But, um, I don’t know. Let’s just, let’s see if anyone has any questions.