Credit scoring, reporting Q and A with Experian, part 6
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.
On Thursday, May 6, 2010, Experian director of public education Rod Griffin answered your questions on credit scoring and credit reporting live via a video stream from the CreditCards.com studio in Austin, Texas.
Below is the last of six parts of the video replay of that event -- which was moderated by CreditCards.com editor-in-chief Dan Ray -- as well as a lightly edited transcript of the video.
Griffin covered a wide range of topics 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.
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.
(0:06) RAY: Gina asks , "Is the data that's entered on our credit report entered by a computer or by a person?"
GRIFFIN: There aren't people typing things anymore. We receive almost all of our information via secured encrypted contact through computer systems and secured T1 lines so we don't even like to ship information around anymore. We're concerned that if you're shipping tapes or shipping CD's that it exposes us to the risk and lenders and you to the risk of fraud, so we want to make sure we don't do that. Comes into our systems. We do review the information that's coming to us for things that suggest something wouldn't be right. For instance if a lender would report 100,000 accounts, and they were all 30 days late, we'd say something's strange there. We need to make sure that it is reported correctly, but we don't have people getting paper documents and typing in the information.
GRIFFIN: Sure, and that's a very good point you often hear the terms interchanged "DMP" or "debt management plan. That's why I say it's important to ask your counselor exactly how their plan works. If you go into a counselor, or contact someone, and they say they are going to negotiate lower repayment terms with your lenders you need to find out exactly what that means and ask them "Will the lenders be reporting the accounts as settled or will they be reporting them as current and paid on time?" and the counseling service can explain to you exactly what they're doing and how they work with lenders so that's a key question to ask them.
RAY: Yea there are some semantics involved too. There's a settlement, lower case "s".... you do after a debt management plan, end up with a lowercase 's' settlement where you are paying less than the original amount, but then there is a different strategy offered by different companies called "debt settlement companies" where they withhold your payment and then negotiate and there are 2 different ways of settling. They end up both settling, but they do so in different ways.
GRIFFIN: Right, and that really comes down to whether you're working with a credit counseling service. One of the things I always advise people is when you're selecting a credit counseling service, make sure that there is truly counseling and education there. Make sure that they provide training around budgeting and credit management. Things that will help you understand where you made mistakes in the past so that you don't make those same mistakes in the future. If you're not getting training and education as well, you might ask some more serious questions.
(2:53) RAY: Tracy asks "Why is the credit score I got online different from the one my lender gets?"
GRIFFIN: Because it's a different score. Lenders select scores based on their particular client or customer base and their particular needs. The score that you get online from any source are really intended to be educational scores. They will give you a score or a number and an explanation of what that scores means. They're excellent for giving you a basis of where to start if you're having credit issues or just want to know where you stand. They'll give you a good general picture of what your credit worthiness is, if you have a strong credit history or a strong credit worthiness or if you have some issues. They'll also provide information about what's affecting that credit worthiness, so that you can to take action to begin improve those things over time. The lender scores, again, are specific to their needs. They may be specific for credit union lending, they may be specific for auto lending. The scores you get online are simply different scores and so you may see different numbers. But again, look at the explanation of the number. Don't worry so much about the number once it tells you where you stand, but rather what in your credit report is affecting your score. Because you always have to remember, the credit score is simply a reflection of the information in your credit report. To change the score, you have to change that report.
(4:12) RAY: Mike and Natalie both ask the same question, "Where can I learn more about credit scores?" At the bottom of this page that you're on there are a couple of links to additional resources at both the Creditcards.com site and the site for Experian. There are plenty of others out there as well, but the ones at the bottom at the page are pretty good.
GRIFFIN: We're a bit biased, but yeah, check with us.
(4:35) RAY: Melinda, great question: "Can you get your U.S. credit score/file transferred to the UK when you move?"
GRIFFIN: And the answer is No. You know, that's a pretty common question and at Experian, what people don't realize is we actually operate in more than 20 countries, and we don't share information from country to country because the credit reporting systems are different, the computer systems are different and the laws are different. So you can't transfer credit history information from the U.S. to the U.K. or from the U.K. to the U.S., you'll need to basically start over. We see that with our own employees because we do operate in different countries we have employees from the U.K. here and from other parts of the world, and it can be a bit of a challenge sometimes in re-establishing a credit history.
RAY: We were talking during lunch and that effects even Experian's own employees.
GRIFFIN: Yes, it does.
(5:28) RAY: Jerry says, 'Someone works out a payoff with one of their credit cards. The card company says if this is paid they will report it as paid in full. Does this actually happen?" I think we asked that a little bit earlier.
GRIFFIN: Yeah, it can, but I would verify it with the lender. It's up to the lender and how they report it. Most often, if you negotiate a reduced payment amount, it will be reported as settled rather than "paid in full" or "settled for less than originally agreed." So it's not typically reported as "paid in full."
(5:59) RAY: Barbara asks, "If your credit score is very good, and you have a high level of available credit, what impact might closing some of those credit card accounts with no balances have on that credit score?"
GRIFFIN: Again, you would see some decline. It would depend again on your overall credit history and the credit scoring system as due to how many points that would be. But, you know, I would look at your credit history and your financial situation and say, "Do I need the accounts or not?" and "Am I planning to apply for credit?" Two questions you should ask yourself. If you're planning to apply for credit, you might want to leave them open. If you're not planning to apply for credit, then it's up to you. Again, don't let the credit score be your only driving factor in your decision. Look at some common sense things. Look at what's best for you overall financially.
RAY: I see the results of our poll, "Have you ever gotten your free credit report?" You all know that you can get them for free. 71 percent of you have gotten one of them from each bureau, 12 percent of you have gotten them in the past and 18 percent of you have never gotten a free credit report. Get on the stick! They're free! All right, well, there's been a lot of good information passed along, and I think we'll conclude it here. Rob, why don't you give a little information on how people can get help on their individual problems?
GRIFFIN: Sure, absolutely. If you have questions about your credit report and need assistance, the first step is to get your current personal credit report directly from the credit reporting companies. So rather than get a report from a lender, go to AnnualCreditReport.com. Or if you subscribe to a credit monitoring service with Experian or if you've had issues or have been declined, the lender should have provided instructions on how to get your report from us. That will insure you that you have a current copy of your credit report with your current information, and it will include a toll free telephone number and a website you can call to receive assistance. So that's really the first step, get that personal report. -- it's simple, easy to read and understand in plain English -- and then follow instructions for contacting us on that report.
RAY: We've had a lot of great questions. I think we've helped some folks understand credit scoring and credit reporting, a little bit better. If you've missed any of the broadcast or you want to see it again as soon as possible we'll be posting a transcript and video as well from the session. Thank you very much Rod for being here
GRIFFIN: Thanks Dan I really enjoyed it.
RAY: And thanks everybody!
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
- Video: 4 times you should close a card – Here are four times you should consider closing a card, even if it means dinging your credit score ...
- Video: What are credit card grace periods? – If you pay your credit card balance in full and on time each month, interest does not start charging immediately on new purchases. This is called a grace period. Let’s see why grace periods are so awesome ...
- Video: Four times to open a new card – Getting bogged down with card offers but not sure about adding more plastic to your wallet? Here are four times we think you should definitely take the plunge ...