Equifax, Inc. · NYSE:EFX
Equifax — Investor Presentation (March 2006)
33 slides from Equifax's investor presentation, March 2006
Slide 1: Youth Enlightenment Series: Education Program Overview
from EQUIFAX Youth Enlightenment Series EDUCATION PROGRAM OVERVIEW I’m Cool On Credit 1
Slide 2: Mission & Vision Statements
MISSION & VISION from EQUIFAX STATEMENTS MISSION To assist students across the United States in developing good financial habits, by demonstrating the importance of good financial health throughout their adult life. VISION Our vision is for these young teens to grow into responsible adults and succe
Slide 3: Program Objectives
from EQUIFAX PROGRAM OBJECTIVES ■ TO TEACH STUDENTS ABOUT FINANCIAL MANAGEMENT ■ TO INSTILL POSITIVE FINANCIAL VALUES & RESPONSIBLE FINANCIAL BEHAVIOR I’m Cool On Credit 3
Slide 4: 4 Module Program
from EQUIFAX 4 MODULE PROGRAM ■ WHAT IS CREDIT ■ APPLYING FOR CREDIT & DIFFERENT TYPES OF CREDIT CREDIT ■ CREDIT REPORTING AGENCIES AND HOW TO READ A CREDIT FILE ■ RE-ESTABLISHING “GOOD” CREDIT / BUDGETING I’m Cool On Credit 4
Slide 5: Module 1: What Is Credit?
MODULE 1 from EQUIFAX WHAT IS CREDIT? OBJECTIVES ■ TO INTRODUCE ALVIN & ALYSSA’S ROLE IN THE PROGRAM ■ TO DEVELOP AN UNDERSTANDING OF THE MEANING OF CREDIT ■ TO RECOGNIZE THE KEY COMPONENTS REQUIRED TO OBTAIN CREDIT ■ TO LEARN WHY CREDIT IS NECESSARY IN TODAY’S WORLD I’m Cool On Credit 5
Slide 6: Credit Is....
from EQUIFAX CREDIT IS.... ■ PROMISE TO PAY LATER FOR GOODS OR SERVICES PURCHASED TODAY. I’m Cool On Credit 6
Slide 7: The Cost of Credit Is...
from EQUIFAX THE COST OF CREDIT IS... ■ THE COST OF BORROWING MONEY – A.P.R. / INTEREST FEES – ANNUAL FEES AP R- 19. – LATE PAYMENT FEES 3% – OVER-THE-LIMIT FEES LATE FEE ANNUAL FEE $29.00 $50.00 I’m Cool On Credit 7
Slide 8: Charge It Today, and Pay for It The Rest of Your Life? (Part 1)
Charge It Today, and Pay for It from EQUIFAX The Rest of Your Life? (Part 1) CREDIT CARD INTEREST ■ $2,000 Purchase Charged to Your MasterCard ■ 19.8% APR + $40 Annual Fee ■ Make Minimum Payment Each Month I’m Cool On Credit 8
Slide 9: Charge It Today, and Pay for It The Rest of Your Life? (Part 2)
Charge It Today, and Pay for It from EQUIFAX The Rest of Your Life? (Part 2) CREDIT CARD INTEREST ■ Takes 31 Years and 2 Months to Pay Off ■ You have paid $8,202 in non-deductible finance charges I’m Cool On Credit 9
Slide 10: Credit Card Statistics
from EQUIFAX CREDIT CARD STATISTICS 600 • 1980 - $82 Billion Outstanding Credit Card Debt 500 • 1993 - $258 Billion Outstanding Credit Card Debt 400 • 1996 - $450 Billion Outstanding Credit Card Debt 300 • 1998 - $538 Billion Outstanding Credit Card Debt 200 • 1999 - $550 Billion Outstanding Credit
Slide 11: Before You Decide to Use Credit
BEFORE YOU DECIDE from EQUIFAX TO USE CREDIT ■ Consider These Questions: ? ? – Do I really need this item? ? – What interest rate am I paying? Are there any additional fees? – How much is the monthly payment? Can I afford that? – What happens if I don’t make the payments? ? – How much more am I payi
Slide 12: Module 2: Applying for Credit & Types of Credit
MODULE 2 - APPLYING FOR from EQUIFAX CREDIT & TYPES OF CREDIT OBJECTIVES ■ TO LEARN THE 3 C’s OF CREDIT ■ TO DISCOVER HOW TO ESTABLISH CREDIT ■ TO UNDERSTAND WHY STUDENTS ARE ATTRACTIVE TARGETS FOR CREDIT CARD SOLICITATIONS ■ TO UNDERSTAND THE DIFFERENT TYPES OF CARDS AVAILABLE TODAY ■ TO REALIZE TH
Slide 13: Most Common Reasons for Borrowing Money
Most Common Reasons from EQUIFAX for Borrowing Money ■ Motor Vehicle Purchase ■ Home Purchase ■ Other Asset Purchases (Furniture) ■ Personal Expenses (Credit Card) ■ Debt Consolidation (Bankers hate to make this type loan) I’m Cool On Credit 13
Slide 14: The 3 C's of Credit
from EQUIFAX THE 3 C’s OF CREDIT ■ CAPACITY – Your ability to pay back a loan ■ COLLATERAL/CAPITAL – Your assets used as a guide to determine your ability to repay the debt ■ CHARACTER – Your reputation as a reliable and trustworthy person I’m Cool On Credit 14
Slide 15: Ways to Establish Credit
WAYS TO from EQUIFAX ESTABLISH CREDIT ■ IT HELPS TO: – Have a Relationship with a Bank or Credit Union – Have Steady Employment, or – Have a Co-signer (Usually a parent or guardian) ■ Sometimes banks or Credit Unions will let you borrow a small amount to see if you can pay it back within three to si
Slide 16: Attractive Credit Card Targets - Teens
ATTRACTIVE CREDIT from EQUIFAX CARD TARGETS - TEENS ■ Credit Card Companies – Want to build brand loyalty early – The average U.S. teen spends $4,368 a year – Realize 20% of American teens carry four or more credit cards, with an average balance over $2,226 1999 Figures $ $ $ I’m Cool On Credit 16
Slide 17: Different Types of Cards
DIFFERENT TYPES from EQUIFAX OF CARDS ■ CHARGE CARD American Express Green Card – Pay entire bill each month ■ DEBIT/CHECK CARD Checking Debit Card – Takes money directly out of your checking account. No money in account = “bounced” check. ■ SECURED CARD $500 Savings Account = $500 Credit Line – Car
Slide 18: 3 Basic Types of Credit
from EQUIFAX 3 BASIC TYPES OF CREDIT ■ SHORT-TERM/30-day Open Account – Set up account; Billed; Pay by Due Date – No interest payments – Examples: Phone, Electric, American Express (Green Card) ■ INSTALLMENT/Closed End Credit – Paid off by set number of payments over a specified time – Examples: 30-
Slide 19: New Car Loan
from EQUIFAX NEW CAR LOAN THE CHOICE OF REPAYMENT TERMS IS YOURS! Repayment Period 36 Months 60 Months 72 Months Total Amount to be Repaid $20,304.00 $22,156.80 $23,040.00 Amount Financed (Average Loan) $18,000.00 $18,000.00 $18.000.00 Finance Charge $ 2,304.00 $ 4,156.80 $ 5,040.00 Monthly Payment
Slide 20: The Power of Interest
from EQUIFAX THE POWER OF INTEREST $100,000 home mortgage 30-YEAR MORTGAGE LOAN approved at 8%. Here’s the Loan Monthly Total difference between a 30- Amount Payment Interest Repayment year mortgage loan and a $100,000 $733.77 $164,149.32 $264,149.32 15-year mortgage loan: vs. For an extra $222.18 p
Slide 21: How It Adds Up
from EQUIFAX HOW IT ADDS UP Pay only the minimum monthly payment on a large credit card bill, and it will take years to pay it off. Credit card banks establish different minimum payments, but only a fraction of a percent difference in the minimum payment makes a major difference in the interest you
Slide 22: Paying a $4,000 Debt
from EQUIFAX PAYING A $4,000 DEBT 9.9% Interest Credit Card ANNUAL % MONTHLY DEBT PAID OFF TOTAL INTEREST RATE PAYMENTS (MONTHS) PAID Why is it so important to 9.9% $100 49 MONTHS $874 make more than the 9.9% $110 44 MONTHS $775 minimum payment each 9.9% $150 31 MONTHS $536 month? Because the more 9
Slide 23: Paying a $4,000 Debt (Part 2)
PAYING A $4,000 DEBT from EQUIFAX (Part 2) 15.9% Interest Credit Card ANNUAL % MONTHLY DEBT PAID OFF TOTAL INTEREST RATE PAYMENTS (MONTHS) PAID Why is it so important to 15.9% $100 58 MONTHS $1,736 make more than the 15.9% $110 50 MONTHS $1,494 minimum payment each 15.9% $150 34 MONTHS $968 month? B
Slide 24: Credit Scoring
from EQUIFAX CREDIT SCORING Loan Application Path of Credit Score When you apply for a Lender loan, your bank sends a request to one of the national credit reporting agencies to run a credit score. The credit reporting agency then Credit Reporting Agency uses Fair, Isaac's Fair, Isaac Score software
Slide 25: Why Do Lenders Use Credit Scores?
WHY DO LENDERS USE from EQUIFAX CREDIT SCORES? ■ Consumers can get loans faster ■ Credit decisions are fairer ■ Credit “mistakes” count for less ■ More credit is available ■ Credit rates can be lowered I’m Cool On Credit 25
Slide 26: Five Main Categories of Credit Scores
FIVE MAIN CATEGORIES from EQUIFAX OF CREDIT SCORES 1. Payment History - What is your track record? 2. Amounts Owed - How much is too much? 3. Length of Credit History - How established is yours? 4. New Credit - Are you taking on more debt? 5. Types of Credit In Use - Is it a healthy mix? I’m Cool On
Slide 27: What's Not in a Credit Score
WHAT’S NOT IN A from EQUIFAX CREDIT SCORE ■ Race, color, religion, national origin, sex and marital status ■ Age ■ Salary, occupation, title, employer, date employed or employment history ■ Where you live ■ Any interest rate being charged on a particular credit card or other account ■ Any items repo
Slide 28: What Is a Good Score to Get
WHAT IS A GOOD SCORE from EQUIFAX TO GET ■ Scores range from 300 to 850, but the great majority of scores are in the 600s and 700s ■ A FICO score of 750 may qualify you for a platinum credit card ■ A score of 675 may indicate you’re a better match for a standard credit card I’m Cool On Credit 28 Sou
Slide 29: How a Score Breaks Down
HOW A SCORE from EQUIFAX BREAKS DOWN Your credit score is based on five factors. Here is how much each factor contributes to the overall score. Requests for new credit 10% Payment Types of credit history in use 35% 10% Current Length of total debt credit history 30% 15% Source: Fair, Isaac I’m Cool
Slide 30: Common Score Reasons
COMMON from EQUIFAX SCORE REASONS The top 10 most frequently given score reasons: ■ Serious delinquency ■ Serious delinquency, and public record or collection filed ■ Derogatory public record or collection filed ■ Time since delinquency is too recent or unknown ■ Level of delinquency on accounts ■ N
Slide 31: How Can I Improve My Credit Score?
HOW CAN I IMPROVE from EQUIFAX MY CREDIT SCORE? ■ Pay your bills on time. Delinquent payments and collections can have a major negative impact on a score. ■ Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a score. ■ Apply for and open new credit accou
Slide 32: National Distribution of FICO Scores
National Distribution of from EQUIFAX FICO Scores 29% 30 25 % of Population 20% 20 16% 15 11% 11% 10 7% 5% 5 1% 0 up to 500- 550- 600- 650- 700- 759- 800+ 499 549 599 649 699 749 799 FICO Score Range I’m Cool On Credit 32
Slide 33: Delinquency Rates by FICO Score
Delinquency Rates from EQUIFAX by FICO Score 100 87% Rate of Credit Delinquencies 80 71% 60 51% 40 31% 15% 20 5% 2% 1% 0 up to 500- 550- 600- 650- 700- 759- 800+ 499 549 599 649 699 749 799 FICO Score Range I’m Cool On Credit 33