Thanks To Our Partners - FICO

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Thanks to our partners 2020 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. 1 1

Demystifying FICO Scores 2018 Fair Isaac Corporation. Confidential. . 2

Polling Question True False Missing a few payments now and then is ok and won’t have much impact on your FICO Scores. Deferred student loans are bypassed by the FICO Scores. Getting married will merge credit reports with a consumer’s spouse. A “hard inquiry” could lower your FICO Scores. Annual household income is part of the calculation of a FICO Score. Closing unused credit cards will improve a FICO Score. FICO Scores may be different across the 3 credit bureaus. The reporting of a credit account in forbearance or a deferred payment plan is considered negative by a FICO Score. 3

Agenda Credit System Overview FICO Score Overview FICO Score Dynamics Protecting your Credit during Coronavirus

How It All Connects YOU LENDERS CREDIT BUREAUS Apply to lenders for new credit and loans Grant new credit and loans to you Create and update your credit report with public record and lender-provided information Creates FICO Score algorithms — used to generate FICO Scores — and provides them to the credit bureaus Pay your bills on time, avoid bankruptcy and collections Report your credit activity and payment history to the credit bureaus Generate FICO Scores based on data from your credit reports Educates and consults with lenders, regulators, consumers and other entities regarding FICO Scores Utilize your available credit Access your credit reports and FICO Scores from the credit bureaus to evaluate your credit risk Make your credit reports and FICO Scores available to lenders Enables consumers like you to access your FICO Scores through myFICO.com, FICO Score Open Access and other authorized distributors Access your own FICO Scores and credit reports Provide consumers free access to the same FICO Scores they use in lending decisions, via the FICO Score Open Access Program 5

Polling Question Where have you recently obtained your FICO Score (check all that apply)? In my online statement with one or more of my lenders At creditkarma.com At Transunion.com At MyFICO.com At creditsesame.com At Experian.com Have not recently obtained my FICO Score 6

Don’t be Mistaken Many credit educational sites provide educational credit scores or credit score versions that are not commonly used by lenders These non-FICO Scores will likely be a different value as compared to your FICO Scores 1. Payment History 35% This can lead to confusion and drive misinformed credit related actions If it doesn’t say it’s a FICO Score, chances are it isn’t. 7

Where Can You Get Your FICO Scores? 8

Agenda Credit System Overview FICO Score Overview FICO Score Dynamics Protecting your Credit during Coronavirus

“The Five Information Zones” Sample Credit Report 1 2 3 4 5 PERSONAL IDENTIFYING INFORMATION John Smith 123 Main St. Anytown, GA 12345 Date of birth: 1-25-85 SSN: 888 88 8888 ACME, Service Technician 52,000 PUBLIC RECORD (LEGAL ITEMS) None COLLECTION ITEMS 7-2018 Collection 500 TRADE LINE (ACCOUNT) INFORMATION Industry Date Reported Date Opened High Credit Balance Status Historical Rating Bankcard 10-18 3-17 5,000 1,479 Current 30, 13 mths ago Auto Loan 10-18 7-15 8,000 1,548 Current Retail 7-15 6-06 1,000 253 Current INQUIRIES Date Industry 7-01-18 Cell Phone 6-15-17 Card Issuer 10

FICO Score Defined A FICO Score is a three digit number ranging from 300-850*, where higher equates to lower risk, that lenders use to help them make more informed credit granting decisions. 1. Payment History 35% *Industry FICO Score versions range from 250-900. 11

How do you get a FICO Score? Not deceased One reported credit account open at least 6 months One reported undisputed credit account updated in last 6 months 12

Polling Question What information is considered in a FICO Score (check all that apply)? Your employment status The date your auto loan was opened Credit card balances Your zip code Your age Bounced checks None of the above 13

Predictive Credit Bureau Data Used in a FICO Score Data elements used must be permissible and predictive Considered Not Considered Trade lines (accounts) Age Credit inquiries Address Collections Public Records Employment Income Race Gender 14

Five Categories of FICO Score Predictive Characteristics 4. Pursuit 4. of New Credit Pursuit of 10% New Credit 5. Credit Mix 5. 10% Credit Mix 10% 10% 3. 3. Credit History Credit History Length Length 15% 15% 1. 1. Payment Payment History History 35% 35% 2. Outstanding Debt 30% 15

1. Payment History Key Factors How recent is the most recent delinquency, collection or public record item? How severe was the worst delinquency—30 days, 90 days? How many credit obligations have been delinquent? 1. Payment History 35% 16

2. Outstanding Debt Key Factors How much does the consumer owe creditors? What percentage of available credit card limits is the consumer using? What percentage is outstanding on open installment loans? 2. Outstanding Debt 30% 17

3. Credit History Length Key Factors How long have accounts been established—average number of months accounts have been open New accounts—number of months since most recent account opening 3. Credit History Length 15% 18

4. Pursuit of New Credit Key Factors 4. Pursuit of New Credit 10% Inquiries: Number of recent credit inquiries (12 months) New accounts—number of trade lines opened in last year 19

5. Credit Mix Key Factors What is the mix of credit product types? Revolving credit—number of bankcard trade lines Installment credit—percent of trade lines that are installment loans 5. Credit Mix 10% 20

Agenda Credit System Overview FICO Score Overview FICO Score Dynamics Protecting your Credit during Coronavirus

Bottom Line Impact -- Auto Loan Example 20,000 - 3 year auto loan: FICO Score 755 21,096 in payments FICO Score 665 22,320 in payments FICO Score 550 25,668 in payments A higher FICO Score can result in big savings (over 4,500 between the highest and lowest FICO Score tiers) 22

Agenda Credit System Overview FICO Score Overview FICO Score Dynamics Protecting your Credit during Coronavirus

Polling Question Have you lost your job, been furloughed or taken a pay cut as a result of the Coronavirus pandemic? Permanently laid off Temporary layoff Employed, but have taken pay cut or have reduced hours Employed, with no change in salary or hours 24

Polling Question Have you reached out to any of your lenders for assistance with payments due to your being affected by the Coronavirus pandemic (check all that apply)? Mortgage loan Auto Loan Credit Card Student Loan Personal Loan Other types of credit Affected, but have not contacted any lenders Not affected 25

Protecting Your Credit During the Coronavirus Outbreak If you are one of the many individuals financially impacted by the coronavirus, help may be available But you have to take action and proactively reach out to your lenders (preferably before you miss a payment) to discuss your situation Lenders have created temporary programs and options that can help you maintain your financial health They can work with you to create a forbearance or deferred payment plan that enables you to temporarily defer or reduce payments on your credit obligation. There are rules on how these programs must be reported to the credit bureaus so as to not negatively impact your credit rating. 26

Protecting Your Credit During the Coronavirus Outbreak Forbearance With loan forbearance, the lender permits the borrower to pay either a reduced payment or no payment for a temporary short-term period. Interest continues to accrue. Deferred Payment Plan with a deferred payment plan, the lender temporarily suspends your payments for a period of time. With deferred payment plans interest does not accrue for subsidized federal loans (student loans as the most common example). Neither of these are intended to be “freebies” – you’ll likely be expected to pay the amounts owed after the forbearance or deferred payment plan ends. 27

Reporting Rules and Impacts on a FICO Score The reporting on an account with the following special comments to the credit bureaus are not considered negative by the FICO Scores Loan in forbearance Loan in deferred payment plan Loan affected by a natural disaster Loan modification The account status must be reported as current (paid as agreed) Other account information continues to be reported and considered by the scores Account status Amounts past due Payment history Current balance Limit/Loan amount 28

Credit Education Credit Empowerment www.MyFICO.com Credit Education Content -- https://www.myfico.com/credit-education Credit Education Pamphlets -- es/brochures Changing the Score Infographic -- https://blog.myfico.com/wp- FICO Forum Community – https://ficoforums.myfico.com/ FICO Score Educational Game -- https://www.creditgalaxy.org/ ity-Infographic 050919.pdf www.ficoscore.com/coronavirus Other resources https://www.annualcreditreport.com/index.action credit-reporting/ 29

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Thank You 32

A "hard inquiry" could lower your FICO Scores. Annual household income is part of the calculation of a FICO Score. Closing unused credit cards will improve a FICO Score. FICO Scores may be different across the 3 credit bureaus. The reporting of a credit account in forbearance or a deferred payment plan is considered negative by a .

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