Narrator (00:00):
Welcome to Module 2: Getting and reviewing credit reports and scores. This module is part of a series called Helping Clients Monitor and Improve their Credit Reports and Scores from the Consumer Financial Protection Bureau. This presentation is being made by a Consumer Financial Protection Bureau representative on behalf of the Bureau. It does not constitute legal interpretation, guidance, or advice from the Consumer Financial Protection Bureau. Any opinions or views stated by the presenter are the presenter's own and may not represent the Bureau's views. The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. CFPB FinEx is a place where financial educators, practitioners, counselors, researchers, and others can share information and best practices, learn from one another, advance their work, and see what CFPB is doing to help consumers.
Narrator (01:07):
Welcome to Module 2: Getting and reviewing credit reports and scores. This module is part of a series designed to help you as a practitioner partner with clients to help them monitor and improve their credit reports and scores. There are a total of four modules that will share the information you need to feel confident having credit conversations with clients. In Module 2, we will learn about working with clients to get and review credit reports and scores, partner with clients who are discouraged, and explore more resources to help you and your role as a practitioner. We know you all work in a variety of settings. However you provide services to clients, your role is essential. It is impossible to cover the variety of places and settings where you offer your skills. Today, we will catch up with Maya, who we met in Module 1.
Maya (02:00):
Nice to see you again. In the last module, I learned the basics of credit and started asking clients if they had a copy of their credit report on my housing intake. Now I want to take the next step and partner with clients as they get and review their credit reports and scores. The family I am working with was able to secure housing, but they still want to review their credit report together. They need to get a car to get to and from work, and they know that their credit history will be an important part of getting approved for a car loan.
Maya (02:34):
Last time, we discussed the differences between credit reports and credit scores. As a reminder, credit reporting companies gather information from a person's credit history into their credit report. Sometimes when people talk about their financial situation, they say they have good credit or bad credit. This usually refers to their credit history. Credit scores are a three digit number based on the information in a person's credit report. Many lenders use credit scores to assess risk and decide how much money they can lend a person and how much interest to charge. Throughout this module, we will include the title of sources you can explore to learn more or reference in the future.
Narrator (03:17):
To explore sources and learn more, go to www.consumerfinance.gov. Search for the title of the resource you're looking for. Be sure to explore all the other information and resources available to you on consumerfinance.gov. Today, we're going to discuss how to get and review credit reports and scores. We're going to start with the credit scores and then we'll focus on credit reports. Generally, a person will need to focus on their credit reports to improve their credit. Usually, a person has to pay to receive a copy of their credit score. While the Fair Credit Reporting Act lets people get free copies of their credit report from the three major credit reporting companies, these companies can charge a fee for the credit scores. However, a person can get a free score in some circumstances.
Maya (04:08):
I want to learn more about free scores and scores an individual pays for. The family I am working with asked about the free credit score on their credit card statement. I want to be able to answer questions about free scores. Let's explore how someone can get both free and paid scores.
Narrator (04:27):
A person can get a free score in certain circumstances, and here are some of them. A mortgage scoring notice. When someone applies for a residential mortgage loan and the lender uses their credit score, the lender will send them a notice with that credit score. An adverse action notice. A person may receive a disclosure from a lender with their credit score if their application for credit gets turned down. If they have to pay a higher initial deposit fee for a cell phone plan, for example, or if they do not get credit with the terms they requested based on information in their credit report. A risk-based pricing notice. A person may receive a notice of their credit score from their lender if they receive credit on terms less favorable than the terms available to most consumers who got credit from that same lender. A credit card or other loan statements. Many major credit card companies and some auto loan companies have begun to provide credit scores for all their customers on a monthly basis. The score is usually listed on a monthly statement or can be found by logging in to an account online.
Narrator (05:35):
From non-profit credit counselors. Non-profit credit counselors and HUD-approved housing counselors can often provide their clients with a free credit report and score, and help them review their report and score. From credit score services, many services and websites advertise a free credit score. Some sites may be funded through advertising and not charge a fee. Other sites may require that someone sign up for a credit monitoring service with a monthly subscription fee in order to get their free score. These services are often advertised as free trials, but if an individual doesn't cancel within the specified period, often as short as one week, they could be on the hook for a monthly fee. Some credit score sources provide an educational credit score instead of a score that a lender would use. For most people, an educational score will be close to their scores that lenders use and can be helpful for our consumers. But the scores can be quite different for some. When choosing where to get a credit score, find out what kind of score it is.
Narrator (06:40):
A person does not need to buy a credit score. They can get insight into how lenders will view their credit record by reviewing their credit reports. A credit report tells a person much of the key information they need. If a client decides to buy a score, they can buy a score directly from the credit reporting companies or they can buy their FICO credit score at myfico.com. Other services may also offer scores for purchase.
Maya (07:08):
After reviewing the information on credit reports and scores, I realize that I want to help clients review their credit reports because getting and reviewing their credit reports can help them improve their scores. Now I need to learn about how clients can get free credit reports.
Narrator (07:26):
A person is entitled to a free credit report every 12 months from each of the three major consumer reporting companies: Equifax, Experian, and TransUnion. They can request a copy online from AnnualCreditReport.com by following these steps. One, filling out a form requesting one, two or three credit reports. Two, choosing the reports they want. They can request reports from Equifax, Experian, or TransUnion. Three, requesting and reviewing the reports online.
Maya (07:59):
I can talk to clients about getting copies of their credit reports online. When requesting copies of a credit report online, the client will need to answer security questions. These questions may include former addresses and information on credit the person has or had in the past. The site is secure and requires the questions to make sure a person sees their own credit report and nobody else's. If a person is unable to correctly answer the security questions, they will need to request their report by mail. I know not all clients will want or be able to request a report online. Let's take a look at other ways to get credit reports.
Maya (08:38):
Some of my clients may not be able to answer the security questions needed to access a report online, or they may not want to request reports online. I did some research on consumerfinance.gov and found clients can also request reports by phone or mail. Clients can call the toll-free number to request their credit reports by phone, or clients can download the Annual Credit Report Request form and mail the completed form to the address on the screen. The family I am working with requested their credit reports by mail. They will bring in their reports and we will review them together at our next session.
Narrator (09:16):
Consumers can get a free credit report from Equifax, Experian, and TransUnion once per year. In addition, an individual can get up to six free credit reports from Equifax in a 12 month period until 2026 under the Equifax Data Breach Settlement if their data was impacted and they have submitted a claim. Individuals can also get free reports if any of the following apply to them. They received a notice that they were denied credit, insurance, or experienced another adverse action based on a credit report. In those cases, consumers have a right to a free report from the credit reporting company identified in the notice. To get the free report, they must request it within 60 days after they receive the notice. A person might also receive a notice from an employer in advance of an adverse employment action based on information on a credit report. The notice must include a copy of the credit report used to make the decision and a copy of a summary of your rights under the Fair Credit Reporting Act.
Narrator (10:16):
This gives the person an opportunity to review the information in the report and verify that is correct. Other types of adverse action notices a person might receive include notice of unfavorable change in the terms, or amount of their credit or insurance coverage, or of a license or other government benefit. Individuals can also get free reports if they believe their file is inaccurate due to fraud, they've requested a credit report from a nationwide credit reporting company in connection with the placing of an initial fraud alert. A person may request two free copies for an extended fraud alert. They're unemployed and intend to apply for employment within 60 days from the date of their request. They are a recipient of public welfare assistance and their state law provides for a free credit report. Knowledge check. Annualcreditreport.com is authorized by Federal law to provide consumers with free credit reports. True or false?
Narrator (11:16):
If you said true, you're correct. Be cautious of sites that require payment information to access credit reports. Once clients have their credit reports, they may notice each report has a slightly different format. That is normal. The important thing is to review the reports for errors. Some common errors include identity errors, errors made on a person's identity information. Accounts belonging to another person with the same or similar name as the person. Incorrect accounts resulting from identity theft. Incorrect reporting of account status: closed accounts reported as open. A person being reported as the owner of the account when they are just an authorized user. Accounts that are incorrectly reported as late or delinquent. Incorrect date of last payment, date opened, or date of first delinquency. Same debt listed more than once, possibly with different names.
Narrator (12:12):
Data management errors: reinsertion of incorrect information after it was corrected. Accounts that appear multiple times with different creditors listed, especially in the case of delinquent accounts or accounts in collections. Balance errors: accounts with an incorrect current balance; accounts with an incorrect credit limit. Now let's review what is in each section of a credit report. A header or identifying information section includes items like a person's name and addresses. Check to make sure the following information is correct: name, including spelling; social security number; current telephone number and address; previous address and employment history. Next is public records. A public record information section includes financial public records, such as consumer bankruptcies and judgments. Check to make sure the information listed should still be on the credit report. Bankruptcies are listed on credit reports for up to 10 years, depending on the type of bankruptcy.
Narrator (13:19):
Civil suits, civil judgments, paid tax liens, account placed for collection or charge to profit and loss, and other adverse items of information other than records of conviction of crimes, can stay on for seven years or until governing statute of limitations has expired, with some exceptions. For example, when a credit report is used in connection with an application for a job that pays more than $75,000 a year, or an application for credit or a life insurance worth more than $150,000, in those cases, creditors, insurance companies and employers may be able to see older public record information.
Maya (14:00):
I have found many clients have debts in collection. Let's take a look at what I have learned to look for. The section with collection agency account information has information on any accounts with a collection agency and the status of those accounts, both past and present. It is important for clients to make sure each account is only listed once, that they are responsible for the account, and that the status of each account is listed correctly. I met with the family for their session and the adults brought in copies of their credit reports. They noticed an account they didn't recognize. They're worried the collections account may prevent them from getting the lowest interest rate when they apply for a car loan. We are going to keep checking their report for errors and then come up with a plan together.
Narrator (14:50):
Credit account information includes information on open accounts someone currently has and closed accounts they had before, the account status such as on time, late, and the amount they owe. Consumer reporting companies are required by law to remove most negative information about accounts after seven years, which generally means that if a person finds an item and they report that it's older than seven years, they should dispute that information. Note that the consumer reporting companies are not required to remove information about bankruptcies for 10 years.
Narrator (15:23):
Civil suits, civil judgements, paid tax liens, accounts placed for collection or charge to profit and loss, and other adverse items of information other than records of a conviction of crimes, can stay on for seven years or until the governing statute of limitations has expired, whichever is the longer period with the exceptions discussed earlier. Then check the status of the accounts and whether they are open or closed. Accounts a person has closed should be listed as closed by the consumer. It is also important to check the payment status and ensure payments were correctly recorded. Finally, make sure the ownership status is listed correctly: owner, joint owner, co-signer, or authorized user.
Maya (16:12):
As we get to the section on inquiries, the family has some questions I am unsure how to answer. I went to ask CFPB to find out some more information. Here's what I learned. If you joined us for Module 1, you may remember what an inquiry is. It is important to make sure there are not errors in inquiries. A credit inquiry refers to a request to look at your credit file, and it generally falls into one of two types. Soft inquiries, these are reviews of a person's credit file, including reviews of existing accounts by lenders, pre-screening inquiries by prospective lenders, and an individual's request for their annual credit report. These will not change a person's credit score. Checking your own credit report is not an inquiry about new credit, so it has no effect on your score.
Maya (17:03):
Hard inquiries, these are typically inquiries by lenders after a person applies for credit. These inquiries will impact an individual's credit score because most credit scoring models look at how recently and how frequently a person has applied for credit. In the inquiry section, it is important to check to make sure all inquiries are listed correctly. The family checked their inquiries and they see a credit card they applied for a year ago. Everything looks correct.
Narrator (17:33):
Knowledge check. A person's request for their annual credit report does not impact their credit score. True or false? If you said true, you are correct. An individual accessing their own credit report is a soft inquiry and does not impact the person's credit score.
Maya (17:55):
At the end of our appointment, we've reviewed each adult's credit report, but we are out of time. We schedule an appointment for next week to dispute the errors on their credit reports. In the meantime, I know clients are frustrated when they get denied for credit or have to pay more for cell phones and insurance. Many clients are discouraged about rebuilding their credit. So I came up with some ideas for partnering with clients when things are hard.
Narrator (18:22):
It is important to provide factual information. Remember to order CFPB materials in your client's preferred language. Ask clients for their ideas and come up with a plan together. Clients have a wealth of experience navigating challenges. Explain that building or rebuilding credit is a process many clients work on and that is part of your core services. And last but not least, start early. Maya will begin working with clients on their credit goals during intake. This gives clients 18 months to reach their goals. Want to learn more to partner with clients on their credit goals? Visit consumerfinance.gov. Check out the credit reports and scores resources page to explore key terms, how-to guides, and videos. Our slides featured a variety of resources. Use the links to visit sources.
Narrator (19:43):
To continue to learn more, join the CFPB FinEx community. You'll receive updates by email and engage with a large network of practitioners. You can also access the LinkedIn discussion group for news, research, and best practices. Plus, stay up to date with webinars, regional meetings, and conferences all while meeting CFPB presenters who can work with your organization. Use the link to join today. Thank you for joining us as we explored the basics of credit. Please join us for our next module, disputing errors and submitting complaints.

2