The first in a six-part series replaying a credit scoring and reporting question and answer session CreditCards.com held with Experian.
Below is the first of six parts of the video replay of that event — which was moderated by CreditCards.com editor-in-chief Daniel P. Ray — as well as a lightly edited transcript of the video.
Griffin covered a wide range of topics and answered dozens of questions in the 45-minute chat. If you missed it or just want to see it again, you can watch it below or check out our event page at CreditCards.com/AskExperian.
And don’t forget, we’ve also got dozens of helpful videos in our complete video archive here at CreditCards.com. That includes a reply of our first live video event — a question-and-answer session on credit card reform with one of President Obama’s key economic advisers.
Click the links below to watch the video replay or read a transcript of our credit reporting Q&A with Experian in its entirety or in six separate parts.
The following is a lightly-edited transcript of the above part of CreditCards.com’s recent question and answer session on credit scoring and credit reporting with Experian. User questions are in bold.
DANIEL P. RAY, CREDITCARDS.COM: Hi and welcome to “Ask About Credit,” our online interactive town hall session about an increasingly important topic: credit scores and credit reporting. I’m Dan Ray, Editor-In-Chief of CreditCards.com, and we’re here in our studios in Austin, Texas. And with me is Rod Griffin. He is the Director of Public Education in Experian, one of the three big credit reporting companies in the United States. Welcome to Austin, Rod.
ROD GRIFFIN, EXPERIAN: Thank you Dan, I’m glad to be here.
RAY: And we’re here for a reason…
GRIFFIN: Absolutely. We hope today to give you some information that will help you better understand credit reports and credit reporting and credit scoring and how you can use your credit history and credit scores as a financial tool to help you get the credit you need.
(0:48) RAY: We’ll be answering questions from the audience, the live audience that we see in front of me here for about the next half hour, although, if it’s going strong maybe we can persuade Rod to stay a little bit longer. You can submit questions through this application on the page that you’re on, or via Twitter using the hashtag #AskExperian. But before we do that, let’s get some basics out of the way. Rod, what is a credit report?
GRIFFIN: Sure. A credit report is your credit history. Your credit report includes several types of information: first, your identifying information. We need to know who you are so that we can accurately match your credit history to you. We have credit reports on more than 220 million consumers so your identifying information is important. We also have certain public records related to debt: tax liens, bankruptcies and civil judgments. You’ll see inquiries on your credit report, but the heart of the credit report is really your credit agreements and whether or not you are paying those agreements on time. Lenders use that information to help them make lending decisions. So your credit cards, your car loans, your mortgage loans will all be part of that credit report and most importantly will show whether or not you are making those payments on time.
(1:57) RAY: You take all that data and you shake it up and you pour it through an algorithm and out pop three numbers called?
GRIFFIN: Your credit score or credit scores, more accurately. There are actually, many different credit scores. Some say more than a thousand, but your credit score is simply a tool that uses — that lenders use to help them make lending decisions to determine whether an individual is a good credit risk or a marginal credit risk. It helps them analyze the information, and the credit report is part of their decisionmaking process.
(2:24) RAY: Excellent. And with that, on to the questions. Anything goes — one exception: We will not be able to solve your specific credit card or, excuse me, your credit report issues. There are ways for you to get individual help, but we think there’s — we see the questions pouring in, and we’ll talk at the end about how to get individual help. And away we go. First question is from Nicole: “How many credit cards and installment loans should a person have to create the best score?”
GRIFFIN: The answer is — and you’ll hear me say this a lot perhaps today — it depends on the individual. Actually, there is no perfect number. Personally, I have one personal credit card, and I have a business credit card, so I only carry two. But I know a person who has 100 credit cards and collects them for the pictures. His credit scores are just fine, but his position in life is much different from mine, and what really is important is that you manage the credit cards that you have well. Make all the payments on time, keep the balances low — all you really need is one or two, and if you do that, you’re gonna have a good credit history and therefore a good credit score.
(3:38) RAY: From Nicole: “Do you have to be a victim of ID theft in order to get a victim statement on your credit report?”
GRIFFIN: You don’t technically have to be, but you really should be. The victim statement process, or what we call “initial security alert,” is really intended for people who have been victims so that they can put an alert on their credit report that tells lenders and it says: I believe I am a victim of identity theft before granting credit, my name takes certain actions. So it’s really intended for people who are. It’s not a good preventive tool if you’re concerned about fraud and really want to check your credit history off. You might consider some of the credit monitoring services that are out there; those are really more ideal for a person that just wants to make sure they are OK. Experian offers them, as do others, so Experian.com is the place to go; my sales pitch for the day.
(4;24) RAY: From Antoinette, and I hope you are not asking this on your own behalf Antoinette. “When do foreclosures drop off your credit, or do they?”
GRIFFIN: Sure, eventually they will. The credit histories, the good thing about a credit history is it’s not permanent. All the negative information does eventually fall off. For foreclosures, there are seven years from the day the foreclosure’s filed, so you’re going to see the foreclosure for about seven years.
(4:47) RAY: Rich Corn asks: “What are some of the uncommon misconceptions on what does or does not impact your score?”
GRIFFIN: Uncommon misperceptions; there are so many common ones. I think the things that people think do are: employment purposes, insurance purposes, preapproved credit offers. Those are the things that people think will affect credit scores and don’t. And really there aren’t any that are coming to mind that are uncommon I suppose. If they popped to mind they would be common so I’m not, I can’t think of any off the top of my head.
(5:22) RAY: OK, we’ve seen this question in both the questions that were asked prior to the event and now we see it again here. Why did Experian move away from and go to the ? Was it a financial decision? That’s from Howard.
GRIFFIN: Well, we didn’t move away from FICO. Lenders still get credit scores, credit reports from Experian and FICO uses credit histories from Experian to do the calculation for lenders. Vantage Score is a new player in the game. They’ve been around a couple of years and, like the auto industry, there are competitors, and Vantage Score’s a good competitor. One thing to understand is that the credit bureaus don’t use the credit scores. We provide the credit history information that’s used to do the calculation, but lenders choose which credit scores they want to use. So they can get a Vantage Score if they want. They can get a FICO score. They can get other custom scores, so there’s as I said, there are many different credit scores out there and it’s not the credit bureau or Experian credit reporting companies choosing the score. That’s just the new player on the market place.
(6:24) RAY: Here’s an interesting one from Gene Haulsen, I think. “How do I check someone else’s credit score?”
GRIFFIN: You cannot. Your credit history is specific to you, and we are very serious about the laws that govern who can access a credit report and who can’t. The Federal Fair Credit Reporting Act specifies the permissible purposes for law for who can access a credit report and it does not allow individuals to check other individual’s credit reports; so you wouldn’t be able to do that. If you wanted to check someone else’s report, they would have to get their report and share it with you.
(6:56) RAY: But of course that’s on the individual level. There are ways for, let’s say, Gene’s a business owner or she’s a landlord or an employer; those are legitimate reasons to pull a credit report, right?
GRIFFIN: Sure, yes, right. And as the federal law specifies what purposes are allowed for getting your credit report. So if you’re applying for credit, a lender can access your credit report if they are monitoring their own accounts for activity and for portfolio management purposes they may access your report to make preapproved credit offers. For tenant screening is another business purpose that would fall under the permissible purposes under Federal Law. So those are all reasons that are allowed, but on an individual basis, you can’t just check someone else’s report.
(7:39) RAY: OK, I see we have gone to a poll here and while you’re answering that, let’s go on. We had more than 100 questions asked in advance of the event, and we’ll answer one of those because, one of those because, the same question kept coming up over and over, John from Pennsylvania, Phil from Virginia, Andrea from Florida, Gail from Texas, and anonymous from Illinois all asked in different ways the same question. “I had messed up credit but now I’m behaving myself; how soon can I expect my credit score to rise?”
GRIFFIN: Again, that depends on the individual. Credit histories or credit reports, and I use those terms interchangeably, but your credit report is unique to you as an individual. The answer is that it depends on how long you’ve had credit problems, how severe those problems were. If you’ve had in accounts and bankruptcy, it’s going to take you longer to rehabilitate your credit report than if you’ve had just one late payment recently. If you’ve had just a late payment and everything else is fine; it may be only a month or two or three and you’ll be fine. On the other hand, it could be nine months, 10 months, a year or more if you’ve had bankruptcy or that sort of thing. A bankruptcy stays on your report for over 10 years so it could take some time, over years in fact, to rebuild your credit history.
See related: The 5 basic elements of a FICO credit score, How to improve your credit score, An interactive, step-by-step look at a credit report, 10 things you must know about credit reports, scores, How to dispute credit errors, mistakes, Protect your credit card, score, 8 steps to picking a credit counselor, Get the REAL free credit report, 5 things you should know about business credit scores, 10 ways students can build good credit, How credit card reform will impact you,
Find the terms you must know in our credit card glossary