NWX -CFPB-HQ (US) Moderator: Heather Brown December 17, 2018 1:00 pm CT Coordinator: Welcome and thank you for standing by. At this time all participants are in a listen-only mode until the question and answer session of today's call. At that time, you may press Star 1 on your touchtone phone. Today's call is being recorded. If you have any objections you may disconnect at this time. I will now introduce your conference host, Dr. Heather Brown. Ma'am, you may begin. Dr. Heather Brown: Thank you so much, Operator. Welcome everybody. I appreciate you during this busy holiday season taking the time to join our webinar. We're excited for the content that we have to share with you today. We're going to be hearing from (Maria Sennett) from the Credit Bureau’s Alliance and (Maria) is the manager of training and program development there. And I saw her speak at a conference and she did a wonderful job and I thought it would be great to have her present to our FinEx audience as well. So before she comes on board, I just wanted to run through our standard disclaimer. This presentation is being made by a Bureau of Consumer Financial Protection representative on behalf of the bureau. It does not constitute legal interpretation, guidance or advice of the Bureau of Consumer Financial Protection. Any opinions or views stated by myself or the other presenter are our own and may not represent the Bureau's views. This document was used in support of the live discussion. As such it does not necessarily express the entirety of the discussion nor the relative emphasis of the topics within. The Bureau's Consumer Financial Protection regulates the offering and provision of consumer financial products and services under the federal consumer financial laws and educates and empowers consumers to make better informed decisions. Many of you know already that you are part of our financial education exchange. The best way to know if you are - is if you got an email ahead of time telling you about this webinar. Then you're a member of the exchange. If you found this on the webpage and joined that way, then if you send an email to the address at the bottom here, CFPB_Finex@CFPB.gov and you can join the email list and be a part of the exchange and get notices for everything. We offering regional convenings, so you can reach out to us if that's something that interests you and then we also have all of our past webinars that we post online and we send out a monthly newsletter. So you won't be overwhelmed with news. Mainly we'll let you know when we're having a release of some research, a tool or a webinar. Okay. I just wanted to share the page that you go to, to look at past webinars. You can do a screen print if you like so you can get the actual webinar URL address there at the bottom. A Many of you have already found that page and visit it regularly. So great. Thank you for that. Also, just to let you know where some of the Bureau's information is on credit reports and scores, we have a portal dedicated to that and it has a lot of information on it that you'll probably find useful. Definitely you will also find resources that are useful to share with your audience, your clients and other consumers. This is the web address at the bottom and it leads to the information we have about credit reports and scores. It also has resources to help you understand your data. We have a worksheet that tells you some specific things you should review when checking credit reports that you can give to clients so they have a little checklist. This side explains where to find free access to credit scores. We obtained the names of financial entities and credit card companies that provide free access to credit scores and put them in one document. So this link will take you to that location. Many of you already have sources to help your client and (Maria) is going to talk further about some ways that you can get access to the credit scores, so I won't go too deep into that at this time. We also have an explanation about one of the questions that we hear a lot that came through loud and clear on the request for information was that people indicated that there were so many different variations of credit scores and the one they were shown by their lender that denied their loan was not the same score they received when they requested the free score. Maria is going to touch on some of that today. So I'm not going to go too deep. We also have further explanations about why you may see three different numbers from three different bureaus. Why the score that you're looking at might be different than the score that the lender provided you. So if you have questions around that, listen to the presentation and if you still have those questions, you can ask myself or (Maria), at the end of the presentation. When the presentation ends, we will have a question and answer session and so we'll take as many questions as we can and then we'll wrap up. Also, for those of you that are interested in a copy of the slides, we do have the slide presentation posted so you can download it. If for some reason you have trouble with that, you can send an email to the cfpb_finex@cfpb.gov and ask for the slides, I can also email them to you or you can download them. Okay. You'll see two set of slides, my introductory slides here and the actual presentation that (Maria's) is using. These are the resources for Finex program - the general webpage that is sort of the entry to all the information we have. This is the email address for signing up for the exchange or if you want to change your address. We get a lot of people that actually move to a different job and we get the reply that they're no longer there. So don't forget if you get a promotion or move to another job, make sure you give us another email so that we can keep you on the list if that's your desire. And we also have a Linked in group and we really want to keep people in there talking and exchanging information and asking questions. So please check back with that and we try to post new things that come out on the Linked In exchange as well. And I'm sure most of you are aware by now, but for those that aren't you can order free brochures and publications in bulk by going to this address. There's no cost. So if you need a set of 25 for a class you're doing, you can do that. You can also download resources from our website. So those are some of the resources we provide and we're always happy to hear from our Finex membership about any ideas or suggestions they have so let us know. And with that, I'm going to turn this over to (Maria) who is going to handle the next presentation. Let me get her slides up, if you'll just give me a quick minute and we'll take it from there. (Maria), I passed it to you. Can you access the slides? (Maria Fenet): Yes. It looks like I have it. Thanks so much Heather and good day all. I'd like to start by thanking Dr. Brown and the CFPB for inviting CBA, Credit Bureau Alliance to present as part of their FinEx Series. So my name is (Maria Sennett) and I'm a manager of training and program development at Credit Builders Alliance. So as Heather mentioned CBA will be presenting at two-part series on the use of credit reports and credit scores as a part of financial coaching tools. So as part of the first series today, we will focus on strategies and techniques for integrating credit scores, reports and your client's goals in your existing coaching processes making the case for credit reports and coaching. So we'll really introduce a lot of the basics in this presentation and in the second webinar which will occur next month on January 10th, we'll go ahead and get down to the nitty gritty and we'll review a credit report and design a credit action plan for a client. So in that presentation we'll discuss the various components of a credit report, identify what factors are necessary for consideration when assessing a client's credit situation and then how do really design that credit action plan. So it can be as effective as possible and in line with the client's goals. So to get started, I would actually like to get to know who is on the line with us today. So you should see on the inside of your screen a poll pop up and I'm going to ask you to just select the best response of the options. So the question is are you currently using credit reports in your financial coaching program. Then we just want to choose one response and the response options are yes, we poll reports on a regular basis; sometimes but only with a specific program; not yet, but we'd like to; or no we do not see the value of pulling credit reports. So I'll go ahead and give the poll a second. I think it's still going. Dr. Heather Brown: Operator, can you see if the audience has - oh it's saying that it's closed. Let me try this again. (Maria Sennett): So in the meantime, while Heather goes ahead with the poll question, I think it closed maybe a little earlier than anticipated. If you wouldn't mind chatting in the top box how you are using. If you are using a report, how you are using it in the programming. It's always helpful to get a gauge of how people are currently using reports and it will help us as we continue moving forward in these presentations. Please feel free to chat some responses in the chat box, as Heather goes ahead to pull that report up. Dr. Heather Brown: I'm sorry (Maria), I'm having trouble with that report. Operator, can see you the results. Coordinator: I cannot see the results because I don't have the polling option at this time. Dr. Heather Brown: I'm sorry (Maria). Let's just move on and then maybe some can share at the end how they're accessing and I apologize. It looks like it's not working. (Maria Fenet): Yes, yes. That sounds great. So by all means, anyone who has -- if you are using credit reports currently in your financial coaching, if you just want to type that in and we can go ahead and share your suggestions at the very end how you might be using them. So moving forward, today we'll just go ahead and cover four topics. So we'll begin sharing about Credit Bureau Alliance and how we might serve as a resource as you continue to build out - your own credit building tool kits or touching on credit - all aspects of different credit components including the credit report and credit score. Next we'll cover some basics of credit to lay the platform for the larger conversation we will have as we dive into discussing credit reports and scores. Thirdly, we'll go ahead and touch on the differences between models and how to identify what you should be pulling through your programs and finally we'll look at the integration piece. So we'll touch on simple ways to incorporate credit reviews ensure existing processes. Hopefully by the end, if you're not already, you can use credit reports in your coaching and we hope to convert you by convincing you of the value of the credit report into coaching programs and the simplicity of incorporating it into existing programming. Great. And I'm seeing a lot of different comments coming through the chat. So that's excellent. So we'll go ahead and share some of those comments at the end of the presentation. So start I'll just share a little bit about Credit Builders Alliance. Credit Builders Alliance or CBA is an innovative non-profit social enterprise dedicated to building the capacity of a diverse and growing network of non-profits across the country that help low and moderate income households build strong credit and other financial assets. Our credit building community is constantly growing. We're at about 510 members strong across the country. So communities that are incredibly diverse comprised of a wide variety of organizations, many similar to yours serving every income, social or including every income social service agencies to multi-service and integrated service organizations such as United Way's local initiative support corporation, financial opportunity centers, Catholic charities, Habitat for Humanity. As well as focused organizations such as non-profit community development, financial institution loan funds or better known as CDFI's, micro-enterprise development organizations, more credit unions. You name it probably in our membership. So our mission at CBA is really to help organizations move people from poverty to prosperity through credit building. So CBA's sells it mission by serving as a bridge between the non-profit sector and the credit industry. We support our members with access to bureau services including credit reports which I will discuss today as well as reporting for consumer and commercial lenders. CBA also serves as a though leader in the field of credit disbursing best practices for training, consulting and technical assistance services, aiming to strengthen the credit building program and products and education provided by our members across the network. So for our members, CBA services touch folks across all areas of the country. So everywhere from rural, suburban, urban and tribal America. And our members primarily focus on serving the low to moderate income community of all backgrounds including persons with disabilities that are veterans, migrants, returning citizens, domestic violence survivors, basically inclusivity is a key here. So we really try to incorporate and have culturally competent material to serve everybody. So underscoring our philosophy that a good credit file is essential to achieving financial stability and we really believe that mission driven on profits, probably on the line are really uniquely positioned to help individuals and families both credit as an aspect. And we believe that credit is often the necessary asset to get ahead and stay ahead. And so we appreciate everything that you're doing on the ground and we look to continue to highlight that work that you are doing. So now that I introduced CBA, let's go ahead and start with some basics. We like to start off our presentations by asking “what is credit”? If we were in person, I would ask for some immediate responses when you hear that term, but because we're virtual, I would just ask that you just reflect on what immediately comes to mind when you think credit. You might find that you have both positive and negative associations with credit or maybe just one of the two. So understanding our own perceptions around credit, and knowing that there are many different perceptions of credit helps us understand the importance of being aware of our own biases and notions before we begin working with clients. So this can really impact the conversation as we work with clients directly. So credit very simply put is the ability of a customer, sub-team goods or services before payment based on the trust that a payment will be made in the future. So it's all about that relationship. We can further frame the conversation of credit by looking at the root. So the word credit comes from the Latin cred or credit which means to trust, to value and worth. On the other hand, debt refers to what is owed to others. While the two are not synonymous from any of our clients using too much credit, may lead to crushing debt. But of course this does not have to be the case. Credit is really just a tool and as with all tools knowing how and being able to use them well is really the key to success. At its core, credit allows you to buy something now and pay for it later. Whereas, debt on the other hand is a liability. So in understanding credit reports and credit scores or the lack thereof, we can use these as proxies to determine whether individuals or small business can access a whole host of products and other opportunities and outlook costs. So credit is really critical throughout the conversation for our clients as we continue to grow our financial capability services. So I mentioned the origins of credit is often times, we experience a roadblock when it comes to credit. For many reasons, credit is often viewed as a deficit rather than as an asset. But at CBA we believe that the first step toward helping a client build credit and pursue their financial goals to refrain from the negative association credit with a positive message that credit is an asset. So and we can do so by really helping clients and equipping clients with the knowledge necessary to understand what's on their credit report and how to use that information to create goals to impact positive changes in their credit profile. Focusing on credit as an asset helps to empower individuals to take control of their credit profiles and financial goals. It's very much an empowering activity and a simple frame of mind shift or paradigm shift can really help clients move forward in this journey. So we think starting with us can be a really good conversation as you begin financial capability services. Continuing on with some of the foundations around credit and I also wanted to go ahead and define some terminology here. So credit can be confusing for all of us and we use various terms when we talk about credit. We use credit history, credit report, credit score, sometimes we use these terms interchangeably when they actually can mean different things. So let's review these basic terms to make sure we're all on the same starting place. So to start credit history or credit file is your overall experience with managing and opening credit account with the firm businesses. So we can think of it as medical or jobs history. So regardless of what any set of records or resume might show, this is always going to - we're always going to continue to build upon this. Whereas, a credit report, on the other hand is a snapshot of your credit history at a particular moment in time. That's pulled for a specific purpose. So a person with no credit history will have no credit report, but in time they might find as they are beginning to build credit that they do have history reporting on their credit report. But a particular point in time is critical here. The last definition that we have on here is the credit score. The credit score is a summary of the credit report boiled down to a three digit number and it's designed to lenders or businesses how risky the consumer might be. So a person with no credit report will of course will have no credit scores and at times people with credit reports that don't contain much information only information may also lack or have a very thin credit report and may lack a credit score for that reason as well. So they may be credit invisible. There's a lot of different terms and we won't define them all in this presentation, but I do encourage you to look at the different terms and make sure we're using them accurately in our conversations. So with that foundation, let's begin by discussing credit reports. So as many of you know, credit report is a comprehensive tool that provides valuable insight into the individual's financial history, knowledge and behavior. So it really can offer an understanding of a consumer's ability to make on time payments and gives the sense of the amount of debt owed, one's ability to access and use financial products and whether consumers are searching for a certain type of credit. You learn a lot about an individual's history through a review of credit report and you can find it. It's a very emotional experience for many individuals as they may have never seen their credit report or recovery from poor past credit experiences and being very understanding when reviewing is really critical when building that trust. So in other words credit reports provide us with a really solid report of an individual's financial patterns. Their ability and stability to make ends meet. There's that obligations. The ability to manage emergencies and the saves and lastly access to asset building opportunities. So really reflecting potential for financial security if they're able to access the housing, a small business loan or the account they need to safely and securely hold their money. There's much to know about credit reports and we're not going to be able to go through everything in this presentation. I wanted to highlight three high level points. And in next month's presentation you'll be able to kind of hone in the more nitty gritty as I mentioned at the start looking at an actual credit report. So a couple of things that we wanted to highlight in this presentation was one most importantly there's not just the one credit report. Similar to credit scores. So credit reports are customized by data sellers for different businesses and for consumers. So today for instance we'll go ahead and dive into the differences between the consumer disclosure and the business division credit reports and identify what might be the best suited depending on the organizational goals. Secondly, the National Consumer Assistance Plan which was a comprehensive series of initiatives designed to enhance the accuracy of credit reports to make the process of dealing with credit info and more transparent for consumers yield the number of changes over the last three years. So I just want to highlight a couple of those changes and if you haven't already become familiar with the National Consumer Assistance Plan, I would highly recommend looking into all the different changes that were brought about through that because these are all designed to help the consumer. But first of all some of the changes brought about will allow the institution of a 180 day waiting period before medical collections can report on a credit report allowing consumers time to deal with any missed or late payments and allowing insurers sufficient time to catch up. So medical that as you know differs from other types of consumer debt in that it often arises from services that are involuntarily, unplanned, unpredictable and where prices are rarely provided. And then secondly because they can result from disputes or delays in payment related to inefficient insurance claims, having a larger window can really help support clients and the accuracy of the information when it's in fact afforded. So that is a change is impacting all individuals. Secondly non-contractual debts no longer report. So these are your parking fines, library fines, traffic violations - things that are not predictive of credit behavior due to the in cap are no longer reporting on a credit report. And lastly another win for the consumer, is that there is better dispute resolution. So more responsive, multiple free reports. If you are following up on dispute outcomes, so you should have much more responsive nature around the handling of disputes which have been a little bit hairy for some. And the last update I want to provide is so through some changes brought about the on top, we saw tax lien and civil judgements beginning to come off of the credit report and as recently as of April of 2018, this is now true of all tax liens and civil judgements, as opposed to only those that lack accurate consumer personal identification information. So full name, address, social security number, date of birth and whose accounts were not verified for accuracy with the courts on a 90 day basis. So now the bureaus have a full opt-out policy when it comes to reporting these reported liens and it also has impacted the reporting of civil judgements. So bankruptcies will continue to report on the credit report, but tax liens both federal and state, as well as civil judgements no longer report. So you might be thinking how is this impacting my clients, is this a win? How is this impacting my coaching? So per the Consumer Financial Protection Bureau's consumer credit report trends, which was released earlier this year in February, most public records were never accurately reported. So with the exception of bankruptcies which did not experience a change in status as I mentioned. But so several judgements have fully disappeared from consumer reports as of July and tax liens saw a decline between June and July of last year. So because of all of these changes, we saw this larger change brought about. So this really impacts the review of credit reports and in turn credit coaching and counseling. So while it's unlikely that most consumers will experience a significant credit score change, this impacts lenders and financial coaches and counselors and in particular those supporting consumers in asset building activities such as home ownership, lending, etc. So clients should really be informed that even if some select records no longer appear on the credit report, they should be aware of the consequences on their ability to access loan products. They should never assume that clients are aware about sending public records. So always knowing that while some clients may be very public around the public record status, others may not be as aware or not be as vocal when reviewing their credit report. So considering that as you do incorporate or continue to build out programming with credit reports, you might consider incorporating a question around public records whether or not an individual's aware of where they have public records and how that might impact their applications for credit or their applications for a mortgage. Because this change is really new, many people are less aware and we're still waiting to see how everything plays out and impacts the individuals and their processes. So a couple of best practices that we like to suggest is as I mentioned always making sure that clients are aware of the potential impact of the NCAP updates and the removal of the tax lien and civil judgments. So consider encouraging clients to self-report any public records that they are aware of. Always suggesting something that you've seen on top of those. A review of the credit report, like yearly can also be a good avenue to support and clients should always consider completing or providing complete personal identifying information when filling in a loan applications. You never want to have mixed reports or an item misreported on an individual's credit report and an easy way to help resolving some cases maybe just providing complete and accurate personal identifying information. Lenders specifically and home ownership agencies may wish to take of opportunities for reviewing public record history and this might be from online select databases but also might include third-party alternative data furnishers, such as Lexus Nexus, risk view reports which does incorporate that data. So it really depends on the region of the country. For some it's really easy to view public record data and for other areas it's less. We could go on and on about some of those updates but those are some of the kind of three high level points I wanted to get across here. So moving forward, I mentioned that there's two types of credit reports. One is the consumer disclosure report and one of which is the business division report. So I want to go ahead and start by discussing the consumer disclosure report. So the consumer disclosure report is designed for consumer education purposes as required by the Fair Credit Reporting Act. It's designed to be consumer friendly by providing instructions and it contains detailed information around creditors and accounts and it also includes all soft and hard inquiries. So it really provides the consumer with the most in-depth content around their credit situation and how everything is reporting. From a coaching perspective, there are probably a few things we want to consider. First of all it's great that the credit reports are available to consumers for free and all consumers should really look to pull their credit report at annualcreditreport.com at least one time per year from all three of the bureaus. In addition, some individuals may also wish to use or may use credit monitoring sites for both the credit report and the score. So some examples might include Credit Karma, Credit Sesame, Credit Wise, I think we're seeing more and more advertisements around credit and it's leading to a larger interest in folks accessing their credit. One challenge that we see with the consumer disclosure report is that while it's designed for the consumer for educational purposes, it might be difficult for consumers to access due to the security questions it may be challenging for some consumers. So when we access on annualcreditreport.com, certain consumers are asked some security questions and those questions may pose difficulties for individuals when responding to those. And for certain people depending on their circumstances, it may also be a difficult to access due to some security features. In addition, reports are sometimes are overly detailed. So this is another area where from coaching perspective it can be overwhelming for a consumer to see just so much information around their credit and while it's always helpful to identify creditor details, and for disputes where necessary, sometimes too much information is overwhelming and can make for a more difficult process for the consumer. But having more information is always helpful of course. In the read to format with explanations really helps support the review from a consumer disclosure perspective. One perk of the consumer disclosure report and many of our members also use both the consumer disclosure report to complement their business division report. So in cases where more information is necessary, individuals or organizations they look to pull the additional credit report to supplement that which is provided by the business division report. So it's great in that case. And then from a soft and hard inquiry perspective, we just always want to remember that hard inquiries are the only ones that impact the score. I think this is the one area where the overly detailed sometimes comes into play. When it comes to the report, we just have to remember that only hard inquiries impact the score. So the consumer and the consumer disclosure report will see all of the inquiries both from their end, as well as from the lender end. And only the ones where applications for credit occurred do we have to be worried about impacting our credit score. It's also helpful to review intention that no accounts have been opened by identity thief and it's initiated by both consumer and some businesses by education and information purposes. So just keeping in mind what the different inquiries or how different inquiries might impact what we can gain from that consumer disclosure report. So at the end of the day we hope that everybody is pulling the consumer disclosure report at least one time per year from each bureau as it is our right to access that information. From an organizational stance, the consumer disclosure report may or may not be the best option when it comes to coaching and programming around credit. So another consideration is a business division report. The business division report is designed for lenders and businesses in order to make lending and other business decisions. So in this case, information may be consolidated and include codes and abbreviations. There's less information about creditors and accounts and it only includes hard inquiries. So it is available to credit coaching and counseling organizations and lenders via data resellers and through CBA's access service which provides access to credit reports to credit coaching and credit counseling agencies. It does include a credit score. So often times, with one of the drawbacks of the consumer disclosure report is the fact that it typically does not include your credit score and if it does it might come at a cost. In this case, it is included and it provides a more holistic picture because it is supporting - it's a contact that reporting. Of course the challenge here is it comes with a higher cost for the provider. So just knowing that when you're looking at business provision reports, it might provide and really complement the services that you provide but it does come with a slight fee. The information is more condensed than the consumer disclosure report which is helpful for reading, but then the coding may draw other questions. It is designed to protect the consumer and therefore it's less detailed than the consumer disclosure report. So again this is where you can see why it's beneficial to maybe use both or at least look at the consumer disclosure at least one time a year. And then you can pull hard and soft inquiry replaces the lender and a soft inquiry is the coaching agencies. So knowing that you have the ability to pull both is really helpful depending on whether or not you are using for an education stance or for an underwriting purpose. And one drawback is it also doesn't provide as much insight into attempted fraudulent account openings, but again the consumer disclosure report provides that. So as an organization, how do you go about deciding what you should do? So if you're signing scoring assistance between the report that your clients are viewing and what your lenders' reviewing or you're working with populations experiencing difficulties addressing the report due to ID, address, etc., or you're assisting with home purchase or other asset building opportunities, or you are a lender, these are all circumstances where the business division report may be a right fit for you. So it might be something to consider and I kind of sped through the differences between the two and I'm happy to answer any more questions, but this is really an area where it might complement. So if you're pulling for instance from TransUnion Direct, you're likely pulling a business division report. But if you're pulling from an www.annualcreditreport.com, or looking at a Credit Karma, you're looking at a consumer disclosure report. So those are the main differences. So we do have another poll. We'll go ahead and see if this one works out. So I do want to just ask if I can ask. How do you access credit reports? I'll just ask that you select all that apply. So are you pulling with the client and you're accessing in through annualreportcredit.com or Credit Karma or myfico.com or are you - do you have a direct bureau relationship with one of the three or all three of the credit bureaus, TransUnion, Experian and Equifax. Are you pulling through data reseller, Core Logic, (Credit Co.) or (Kole) or another data reseller? Or are you a member of CBA? Maybe you're using our CBA access service. I just want to take a second to go ahead and submit your answers. We're just take a second to see if this work and if not, we'll continue through - we still have some more content to cover. Heather, I'll go ahead and let you move the poll question forward whenever you're ready. Dr. Heather Brown: Okay. It looks like responses are slowing. I'll just give it a couple more seconds and then I'll go ahead and close it. (Maria Fenet): Great. Dr. Heather Brown: It's coming down on its own. So you should be able to see the results. Can you? Oh wait a minute, not quite. All right. Now you should be able to see the results. (Maria Fenet): Great. So it looks like many of us on the line today are using a credit report or sharing with a client via one of the client access options. So annualcreditreport.com, Credit Karma, My Fico. There are a number of individuals on the line that have direct credit bureau relationships and even fewer are data resellers or have relationships with a data reseller Core Logic. So maybe some of our lenders on the line or housing agencies and then lastly there are a couple people who are using our TBX to access the rest. Great. Dr. Heather Brown: We also had a couple of people that said N/A. So they just wrote it into the chat. So just so you know. (Maria Fenet): Great. Thanks for that. And so we're hoping then that some of you, might also consider looking at opportunities to incorporate it if you're not already or considering ways to add on multiple different services. Great. Well thank you so much for answering that question. So moving on from credit reports, we'll go ahead and touch on credit scores. So similar to credit reports where there are many versions the same is really true with credit scores and this is where we think there is a lot of confusion around credit. So lenders use different scores to measure risks for different types of lending. So lenders might be looking for slightly different characteristics and borrowers applying for different types of loans. So think about auto lenders, first mortgage lenders, first credit card companies and landlords and insurance companies. And therefore, the risk for the model has developed many different algorithms that help for the differences that lenders and businesses are looking at. So of course this can create some confusion if we're looking at a report online and seeing one's score and we're working then with a lender and getting another score. So why it is that credit scores vary? There are many differences and it could be any of these or a multitude of different reasons why there are differences between credit scores. So the first might be because of a business factor as I mentioned. So mortgage, first credit cards, first banking and the risk assessment. So each company really decides what is of most value to them and might prioritize different loans over credit cards and that hierarchy can impact one's credit score. And tied to that is the credit reporting agencies. So each business determines whether or not they're going to report to all three of the bureaus or maybe they're only going to report to one or two bureaus. So that of course could also impact the credit score that an individual has and creates differences and distinctions between the bureaus. On top of that we have our different modelers and generations. So we have both Vantage Score and we have FICO being two of the primary whereas Vantage Score keeps the across the different credit reporting agencies keeps the same underwriting features, with FICO we're seeing different criteria coming into play for each Transunion, different criteria for Experian and different criteria for Equifax. So that again can create a little bit of discrepancies and challenges when we're trying to understand why our scores are different. Also as we mentioned earlier, it really depends on the date that the credit scores also calculated. So if we're pulling a credit report today versus you know a month ago, we're going to be seeing some changes. Lenders are reporting or creditors are reporting on different dates. We might have like payments occur or balances drop on credit cards, all of these are new inquiries we're putting. All of these different things will come into play and really begin to impact the score that one's seeing. And then there's a quantity of credit score originators that are also producing both proprietary and non-proprietary models, so the quantity of risk can also impact the types of scores that we see on the market. So again creating a little bit of some confusion around different credit scores. So with that I just want to go ahead and mention you're probably very familiar with it, the two primary models out there. One created through FICO and the other created through Vantage. So if I go to today's so this is the oldest model, so it's created by Fair Isaac Corporation and it's is used by 90% of lenders. FICO has come out with multiple generations of a FICO score over the last 25 years. So constantly innovating to ensure they are staying on top of market trends and kind of changes from a regulatory environment as well as from consumer demand. And then also they develop a separate FICO credit score model depending on each bureau. So again a little bit of distinction between TransUnion, Experian and Equifax for the FICO score. So there's a multitude of FICO scores because of the generations, because of the different scorecards depending on whose reporting and which bureau it's being reported to. Vantage Score is a little bit newer, it was introduced in 2006 and it was created jointly by the three major credit bureaus, TransUnion, Experian and Equifax in order to create a more consumer friendly and successful credit score. It is being used by a growing number of lenders so more and more every year and there have also similar to FICO been a multitude of generations developed over the last 12 years, but fewer than in the FICO model in this case. As I mentioned they also Vantage score differs from FICO has one algorithm and it is used across each bureau's data so it makes it a little bit easier sometimes to when reviewing across those different bureaus. When accessing different scores, there are a variety of different places to do so. So and again we have to be careful because we're never too sure always which score might be offered. But for free, if you have financial institutions, credit card issuers, credit sites, Credit Karma, non-profit credit and financial counseling programs so you now the Fed has shown a CFPB resource and we always refer to that as well. There's a growing list of organizations that are pulling and providing free credit scores. What's critical to do is when you are reviewing is always to confirm the score type by reviewing the fine print. So when it comes especially to the FICO score, ensuring that the FICO - the trademark is also shown because just because it says it's free credit score, just doesn't mean it's just a free FICO credit score or free Vantage score. So always confirming what type of score is being provided is critical and most options should be able to provide that information - it's usually in smaller print than some of the actual credit score. And also consider purchasing credit scores with a business division reports. So as I mentioned that's a huge perk for a business division versus the consumer disclosure report the fact that you can access some of those credit scores. And non-profits and whether it be a credit coaching agency or a social service agency whatever and each is a non-profit 501C's have the ability to select the bureau and the credit score generation that they wish to view and/or also to incorporate a multiple options in their own reports. So it really offers a business division report offers the ability to customize a little bit more based upon your organizational goals and the mission of the work that you're doing. For those organizations that are pulling through business division reports, since TransUnion direct through other avenues, there's the opportunity to disclose FICO scores specifically through those FICO open access for credit and financial counseling. So this program is for non-profit organizations and it's a way for non-profits to share the credit score that they'll be purchasing with the client. So this was the first way that FICO - the first program that allows organizations to share that score directly with clients because in most cases, their score is not shareable without usage of this program. So it's a great way and it doesn't cost anything to get into the program and it offers a great opportunity for organizations. Because there's so many different credit scores out there and so many free platforms, we just want to offer a couple of pros and cons of the different platforms. So when accessing for free, some pros are that it does provide summarized credit information, it provides free credit scores or personalized recommendations or product recommendations. Some cons of some of the free credit platforms are that they are not ideal if consumers need detailed credit report information. It can be difficult to access for people without a social security number or who have difficulty answering detailed security questions. They're not always clear which a score version is offered and again this is an area which we must read the fine print. So when working with clients and you're using a free credit score platform, if it doesn’t read FICO score with a registered trademark, it's not. So I think this is always a really important point to highlight. And then customers must share personal information when completing some of the free credit score platforms and they may also receive marketing messages. So for better, for worse, as long as an individual is aware of these things, as long as you're using maybe one platform, it can also help support on a regular integration of credit reports in understanding the credit building journey more on a large scale. So as you can see there's so many scores and scores that your clients may see through online resources and of course may be different than the actual score. It can be very easy to become overwhelming. So we want to make sure that we're always refraining that credit scores are overwhelming or that's credit is overwhelming and we can do so by really focusing on the trend upwards. So if we're seeing credit score improvement on some of those free credit score platforms if that's what our clients are using, that's always a positive. If we're score range change and if we're seeing an individual moving from subprime to prime that's also one of the largest changes, we're always looking for. And then most importantly the financial actions that lead to good credit and these are often very visible in the credit report. So whether an individual is able to pay on time, keep a low balance, and maintain regular activity on their credit accounts, these are all really important and visible items that the scores are just reflective of. So most credit scores regardless of the type of credit score will generally improve if the underlying actions improve. So if there's no positive activity reported, there can be no credit. So again this is a quick peek of some of the information but kind of connecting from credit reports and credit scores and the value that each provides and integrating it into the financial coaching. We believe that credit financial coaching are an ideal match. Starting off you really - coaching relationships are ones built upon trust and I need to forward my slide here and credit really is a situation where trust is really necessary to help support clients. It's important to offer support through a strength based client driven process, financial coaching and the same goes with credit. We're really looking for the client to drive the session and for them to identify any natural connection to financial goals and as a financial coach being able to support their journey, understanding their goals is really the role that we see and we see that credit really can help enhance that. Credit reports can also offer additional outcome tracking metrics. So from a credit report stance, from a credit score stance, there are many different metrics that can be drawn from those areas and they can also help improve and highlight the impact of financial coaching. It's an opportunity for clients to feel empowered because they have an understanding of the credit system and they can own their financial situation. So they can - knowing what they can do to improve their situation or improve their credit is really powerful and we see the impact directly as individuals move forward with their credit knowledge. It provides a credit strength necessary to achieve those goals. It also really improves members' ability to measure clients and credit financial progress and success over time. So again it's a file tracking - it's a great metric and lastly for the members, credit really helps incentivize client participation and credit and financial education and coaching programming. It offers a series of teachable moments that are very tangible and it's a reason it provides like a carrot to continue the conversation. People often once they understand the value of credit become really excited and want to continue to work towards improving their credit and that's the value of having the credit report and the score that can help guide that process. Dr. Heather Brown: Maria? (Maria Fenet): Yes. Dr. Heather Brown: Hi. I just wanted let you know we're bumping up against three here. We've got about two minutes left. So I wanted to know if you wanted to take a few questions and let (Carmina) finish the rest of the slides in the next session in January or did you want to go ahead and finish and skip the questions and let her answer those next time. (Maria Fenet): I'll go ahead. I'm almost done. I'll go ahead and wrap up really quickly with a brief comment and then we can then take questions. If that works. Dr. Heather Brown: Perfect. Thank you. (Maria Fenet): Thanks. And so from a project mapping stance credit really can intersect it all in different areas. So you can see the different areas here listed here. And when we do talk about credit, we want credit to be a continuous part of the conversation. So this is a benefit again of intersection and various components in various areas. So intake gives you a good starting point prior to any applications, it gives you a sense of ensuring that the clients are going to access and be ready for the process they're applying for. Then as part of the ongoing coaching and support strategy to build financial stability provides the continuous motivation that continues through the process even when times can get rough because credit is not always as glamorous as we all know. But it can provide access to the financial goals that individuals are looking to achieve. Lastly credit is just one step in the journey, but it's an integral piece. So credit is a silo and it's really not as beneficial as intersection credit into existing programming. So whether it be talking about savings, whether it be accessing different opportunities, such as home purchase or whether it be just simply about building credit. There are many different ways that credit really integrates into and is a part of the larger financial security accumulation. And then as far as a call to action. It's important for all of us to look at different ways to educate our clients on how to pull credit reports and why lenders see something different. Engage with local lenders what score and report versions they're using. This can really help enhance and be a win, win, win for all people involved, - the financial institution, the client, and the organization because they're building upon relationships that allow individuals to access their best services that they can access. And then identify all intersection points with credit reports and scores in your current program. So these are the three big takeaways that I hope that you've walked away with from this presentation. And as Heather mentioned we'll have a second section of this webinar series which is just honing in on reading a credit report and designing a credit action plan. So beginning to take some of the larger, higher level education knowledge into practice when it comes to actual incorporation into a program. And with that Heather I will open it back or hand it back over to you for any questions and obviously we're close to time here. So feel free to pass along additional questions this email listed programs@creditbuildersalliance.org, we'll be happy to answer any additional questions that we don't get to on the line. Dr. Heather Brown: Great. Thank you (Maria) for such an excellent, informative and packed session. You got a lot into an hour and it was really great. Operator we're going to try to take some questions on the line and I guess if you will give them the instructions for asking a question and I will - while we're waiting to see if anybody asks, I'll read through some of the questions that we have on the screen. For those that need to go, we understand and you can email your questions. For those that want to hang on, to get their questions answered, we'll do the best we can to get through them in the next five or so minutes. Operator. Coordinator: We'll now begin our formal question and answer session. If you would like to ask your question please unmute your phone, press Star 1, only record your first and last name. To withdraw your question, you may press Star 2. Once again in order to ask your question, please press Star 1 on your touchtone phone. One moment for the first question. Dr. Heather Brown : Okay, while we're waiting for the first question, I just wanted to point out that several people did comment that they are pulling reports already so that's great to see and some people are just using it to determine mortgage readiness and others just seem to be doing general counseling. There's some that aren't that would like to. So you have the programs that Creditbuildersalliance.org to get more information on that. So quite a few comments around pulling credit and it's good to see that that's happening and what people are using. We had a question about hard versus soft pulls but I think you answered that (Maria) as we went through which hard pull means that you're actually doing loan credit check and it shows up on your credit versus a soft pull not showing up. We did have somebody ask--they wanted to confirm that there should be outstanding federal or state tax liens on a credit report any longer. Can you comment on that (Maria)? (Maria Fenet): Yes. I think you said the question why that's supporting or how one can access? Dr. Heather Brown: No the last question no outside federal or state tax liens should be - the person is trying to confirm that there should be no federal or state tax liens on the credit. Is that true that they should all be gone at this point? (Maria Fenet): That is correct. So under public records, the only information that should still be reporting is still the information around bankruptcies. Dr. Heather Brown: Okay. Great. Thank you. Somebody asked how to get the slides and you can download them from the presentation or you can send an email to the Finex mailbox which I sent you an email about this presentation and we can send you the slides. Someone asked if you recommend that organizations use FICO 8 or FICO 9. I don't think we really got into that level of detail. My understanding is FICO 9 is the current version but a lot of people aren't - if it hasn't been approved by HUD for housing, is that correct? (Maria Fenet): Yes, when it comes to housing FICO 4 is the version that most lenders use and this is where the point where I mentioned that getting in touch with your local lenders can really help highlight what's the best version depending on the kind of goal you are assisting clients with. From our understanding FICO 8 is the most widely used of the FICO versions at this point in time. FICO 9 is still newer on the market and when we introduce new products, new credit score models, what happens is it takes some time before each lender is ready to incorporate that into their own lending and credit programming. So in terms of an underwriting and a programming stance, it takes time to implement and to incorporate. So while it's important to stay on top of the new models and what they're offering they may or may not be really what the clients what actually seen from a practical stance. Dr. Heather Brown: Okay. Operator. We can take some calls from the line now. Thank you. Coordinator: Certainly and our first question is coming from (Cara Stanley). Your line is open. (Cara Stanley): Yes. My first question. I have two and they're quick. How do you get a copy of the recording? I think you said you can get it from one of the emails I think. Dr. Heather Brown: Yes, well we will post the recording online and as well if you send a note to our mailbox and you just want a copy sent to you, I can do that as well. The slides - you can download them from your file menu options on the actual presentation while it's live now for the next few minutes. If not, you have to also email the Finex box. (Cara Stanley): The Finex box. So it didn't come from - my manager sent it to me that's how I got the email. So that's why I was wondering. Dr. Heather Brown: Oh, well definitely send an email to CFPB_Finex@CFPB.gov. I'll type it in. That way you can get on our mailing list as well. Thank you. (Cara Stanley): Thank you. My last question was about student loans and how do they affect the reports? (Maria Fenet) Yes, student loans we didn’t' touch on that today. So reporting on the credit report it can impact and ideally it would impact in a positive way but of course there's also a lot of repayment opportunities especially for federal loans and would recommend looking at some of the federal resources around student loans and repayment options. But if they're reported to the credit bureaus, they're similar to any sort of installment account or a loan option. So it should benefit and improved if paid on time or it can drop one score if not in a positive repayment plan. (Cara Stanley): Okay. Thank you. Dr. Heather Brown: Thank you (Maria). Operator, are there any other questions? Coordinator: I believe no further questions in queue at this time. As a reminder you may press Star 1 on your touchtone phone. Dr. Heather Brown: Okay. Let me make sure I didn't miss any other questions in the Q&A and then somebody said that the (Bentley) site said it didn't work to get the free credit score. But if you actually go to - I'll pull up our slide that has our location on our website and actually if you go to the first URL, consumerfinance.gov, adult financial education and do a search on credit, you can get information on places that offer free credit scores. So that might be a good way to do that. Somebody said you mentioned a delay in medical collection reporting, is there a reduced weight of medical collections for how much it impacts the score? (Maria) are you able to answer that one? I can’t answer that. (Maria Fenet): That would go into more detail. What I would say is some of the models do - some of the newer models do consider a weight reduction, but that would be something to look into more specifically because there's more around that information. But knowing that - yes it depends on the model as to whether or not that reduction is calculated into that kind of score. And that's true for both the newer FICO 9, excuse me for the newer FICO and Vantage score models out there. Dr. Heather Brown: Okay. Wonderful. Well I guess with that operator if there no other calls waiting, we'll probably wrap up. We've held (Maria) over and other participants. We thank everybody for joining and we'll hope to see you on January 10th from 2:00 p.m. to 3:00 p.m. Eastern Time. Have a wonderful holiday season and talk with everyone in the New Year. Thank you. Coordinator: This will conclude today's conference. All parties may disconnect. END NWX-CFPB-HQ (US) Moderator: Heather Brown 12-17-18/1:00 pm CT Confirmation # 8518976 Page 1