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HSFPP Weekly Update # 129—Credit History, Personal Behavior, and Employment

 Message from Flashman: This week, we deal with employment and background checks, another reason to be concerned about all the personal information contained in numerous databases; the lesson integrates what is covered in Unit 2 and Unit 5 in the Student Guide.

How much of this personal information is accurate? It’s hard to know, as we can’t even be sure how many databases, other than those of credit bureaus, have information on individuals. In addition, teenagers need to think before they act because their driving records, especially DUIs, can hinder their prospects for future employment. Even seemingly minor details such as not making at least a minimum monthly credit card payment on time can do real harm not only to a person’s credit rating and history, it also can reduce their chances at certain types of employment.

This is a good time to remind Kentucky teenagers and their parents that, beginning June 1, 2005, as a result of the Fair and Accurate Credit Transactions Act (FACT Act) passed by Congress in December 2003, they can get a free copy of their credit reports from all three major credit reporting agencies once each year.

Our article In the New$... varies somewhat from the usual format, as it includes, along with excerpts from a current news story, data from two earlier surveys dealing with inaccuracy of credit reports, and some additional information from me on obtaining free credit reports; thus, it shows the significance of the problem, as well as informing readers of the new law to correct these inaccuracies. Also, the Web Site Pick of the Week mentions particular publications that we hope you will have your teenagers share with their parents.

Please let us know of anything else we should cover in future updates. We always want to know what you would find helpful. The end of the school year is drawing near and, in the fall, many students will be exposed to the High School Financial Planning Program for the first time. Are we providing the financial information they need? What could we do better? What subjects should we deal with next year that we have not dealt with so far? We can only respond to your needs, and the needs of your students or 4-H’ers, if you tell us what they are! This is a two-way process, so please e-mail us what you think, especially on changes in this week’s update. My e-mail address is rflashma@uky.edu.

Related Updates (Most recent):

Update #78 - Fair and Accurate Credit Transaction Act of 2003 - 9 January 2004
Update #98 - Protecting Your Social Security Number - 20 September 2004
Update #118 - Avenues for Identity Theft - 21 February 2005

 

Web Site Picks of the Week

A comprehensive consumer guide, “When Bad Things Happen to Your Good Name,” is available from the Federal Trade Commission’s Web site, www.ftc.gov; and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Or you can call them toll-free at (877) FTC-HELP or (877) 382-4357. Their TDD number for the hearing-impaired is (202) 326-2502.

Also, from University of Kentucky Cooperative Extension: “Let the Consumer Beware!: A Guide to Fraud and Rip-Offs,” available on the following site:

http://www.ca.uky.edu/fcs/FACTSHTS/FAM-RHF.116A.pdf.

If you have the means in your printing budget, you might want to print out copies of this publication for each of your teens’ parents.

 

Activity for Educators:

 

This week’s activity comes from Update # 78 (link provided above), with a few minor changes.

For further class discussion, it would be interesting to hear what parents think of these issues. Are they concerned? What are they doing to protect themselves and their families from identity theft and other problems resulting from private information stored in databases?

In the New$.... More Job Seekers Haunted by Past / Computer Gathering of Personal Information, Much of Which May be Inaccurate

Did you know that, despite the best efforts of law enforcement and the business community, identity theft remains widespread, ruining the credit of millions of consumers? Also, as you apply for jobs and make plans for your future career, consider the following, from the Palm Beach [FL] Post:

“...more employers are digging into job candidates’ backgrounds, and the scrutiny is turning up damaging information, according to a study of hiring trends.

“Background checks have risen 16 percent in the past year, the ADP Employment Services Hiring Index found. About 4.4 million background checks were conducted last year, up from nearly 3.8 million in 2003. That’s also triple the number of checks conducted just eight years ago.”

As an example of problems created for job hunters, “Forty-five percent of credit records checked showed a judgment, lien or bankruptcy, or some report to a collection agency.”

“In 9 percent of the cases studied by ADP, the data contained inconsistencies or negative information. The inaccuracies centered on criminal, credit and driving records, workers’ compensation claims and reference checks.

“Technology and the emergence of hundreds of background-checking companies have allowed not only companies, but individuals and the media, to peer into people’s lives with relative ease, legal and workplace experts said.”

Source: Excerpted from “More job seekers haunted by past,” by Tammy Joyner, Palm Beach Post-Cox News Service. From The Palm Beach [FL] Post, 4/27/05.

* * *

“Research for [a Consumer Federation of America] study, conducted during the summer of 2002, analyzed the credit scores of more than 500,000 consumers, and extensively reviewed the files of more than 1,700 individuals, maintained by the three major credit repositories – Equifax, Experian, and Trans Union.”

“The analysis of 51 representative files for consistencies and inconsistencies revealed reasons for ... differences in scores ... Seventy eight percent of files were missing a revolving account in good standing while one-third (33 percent) of files were missing a mortgage account that had never been late ... In 43 percent of the files, reports on the same accounts conflicted in regard to how often consumers had been late by 30 days. In 29 percent of the files, there was conflicting information about how many times the consumer had been 60 days late. And in 24 percent of the files, conflicts existed about 90-day delinquencies. Reported delinquencies have a large effect on credit scores.”

Source: Excerpted from “Millions of Americans Jeopardized by Inaccurate Credit Scores” [News Release]. Consumer Federation of America, 12/17/02.

* * *

Another survey of adults in 30 states undertaken by the U.S. Public Interest Research Group (U.S. PIRG) in 2004 related to accuracy of credit reports. Following are some of their main findings:

- “Twenty-five percent (25%) of the credit reports surveyed contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer;

- “Fifty-four percent (54%) of the credit reports contained personal demographic information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;

- “Twenty-two percent (22%) of the credit reports listed the same mortgage or loan twice;

- “Almost eight percent (8%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer;

- “Thirty percent (30%) of the credit reports contained credit accounts that had been closed by the consumer but remained listed as open;

- “Altogether, 79% of the credit reports surveyed contained either serious errors or other mistakes of some kind.”

Of course this was a small sample, but it could happen to anyone, especially with the increase in hacking of computer systems collecting the personal information of millions of Americans just in the last month.

Source: Excerpted from MistakesDo Happen: A Look at Errors in Consumer Credit Reports [Executive Summary]. National Association of State PIRGs, June 2004. Available online at http://uspirg.org/uspirg.asp?id2=13649&id3=USPIRG&.

* * *

What can you do to prevent inaccurate information from denying you credit and other opportunities, including job opportunities? For one, you can request a copy of your credit report from the top three credit reporting agencies—Equifax, Experian, and Trans Union—and check your record for inaccuracies. If you find inaccuracies on any of your reports, notify the agency that provided the report and provide them the correct information as you understand it. You should be keeping records of all your financial activity, as such records can be helpful in claiming tax deductions and can help you establish the correct information on your credit reports.

Beginning June 1 in Kentucky and surrounding states, you are entitled to a free credit report from each of these three credit agencies once a year. To get the greatest benefit from your free reports and to make sure that someone has not stolen your identity, you might want to request a free copy from just one of the three major credit reporting agencies now, wait four months and order a report from one of the others, and then wait four more months to order your report from the remaining agency. Remember to order your credit reports the same way each year so it does not cost you any money, since the law only requires each of the three agencies to send you one free report if you have not been denied credit.

The telephone numbers for the three major credit reporting agencies are: Equifax – (800) 525-6285; Experian (formerly TRW) – (888) 397-3742; and Trans Union – (800) 680-7289.

Source: Robert H. Flashman, State Extension Specialist for Family Resource Management, University of Kentucky. State HSFPP Coordinator.

 

Discussion Questions:

1. What can you do to minimize errors in background checks by potential employers?
   
   
2. Who else, other than potential employers, do you think is likely to request background checks on you?
   
   
3. What are some legitimate reasons that people or organizations might have to perform background checks on you?
   
   
4. What are some questionable reasons that people or organizations might have to perform background checks on you?

 

Activity:

Go to one of the three major credit bureaus’ Web sites and get a copy of your credit report. Be sure not to share your report with others in the class, but only the information called for by the questions. Also be aware that you may not have a credit report if you do not have a credit card, have not bought a car, and have not taken out a loan in your own name.

http://www.equifax.com
http://www.experian.com
http://www.transunion.com

Then answer the following questions:

1. Do you have a credit report? Yes___ No___

• If yes, do you understand the report? Explain what the information on the report means. (Example: what does an R1 or an I3 mean?) What steps can you take to correct incorrect information?
  
• If no, and you have a credit card or a loan, why is it not on your credit report? What steps can you take to get that information on your report?
  

2. How can you improve your credit score and maintain your good credit report?

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.