>> hello. >> congratulations. >> thank you. >> what made you pick this topic? >> i think the topic of texting while driving is a really important issue with people who are my age, especially. but it also applies to adults that are driving as well. a lot of people think it's only teenagers, but there are a lot more people out there that are doing it and it's pretty dangerous. >> what do you do to stop from text driving? >> my friends and vi this thing that's called designated tex ter. and when you're in the car and usually the person in the passenger seat will text back for you. host: and what was your reaction to some of the people that you interviewed that they say they still fesked while driving? >> i was shocked. there >> definitely a lot more people

that do than are against it. and i was shocked by a lot of answers of people that say even if they got in an accident that they don't think they would stop. and there are several adults that admit to texting and driving as well. so i was shocked about that, too. >> do you think that the government is doing enough to stop people from text driving? >> no. but i don't think it's on the top of their list to do. but i know there are 13 or 14 states that have enacted laws, but flaw is not one of them. host: do you think that the laws that they are creating are working to help prevent this problem? >> i don't know. i think it would. i think if there were a law that a lot less people would do it. i know my friends said if there were a law it would probably stop them or at least reduce the amount they do it. >> what do you think the hardest part about making this video was? >> this is the fourth video i

made, so it was -- it's gotten easier as i'm learning the software. the most difficult part i would say is choosing the parts of the videos that i wanted to include. making an eight-minute video is a lot more difficult than it sounds. i had at least an hour and a half, two hours of footage. and i had to go through and watch it several times to see what part i wanted to use. there were a lot of good parts i could make it twice as long. it was difficult to choose. >> this is your fourth time entering. what draws you to enter this competition? >> the first time i think it was i really am interested in film and i love photography and i was interested in trying something new. after i completed my first ones, i was interested in the political aspect and i enjoyed making the documentary. it's working under pressure, too. and it can get stressful, but i found that i thrive under that

and i was doing it because i enjoy doing it. >> congratulations once again, laura. >> thank you. >> let's watch a portion of laura's video. >> on my way to work i was sending and receiving text messages when i steered across the centerline and i struck another car. in this other car there were two men who were both killed on impact. two men that were fathers, were husbands, that cared for their family, wanted the best for them. and because of my choice to text and drive, i took their life. i changed the lives of these families. i changed my life forever. >> as you can see, laura's entire documentary and all the other videos any time. just go to student cam.org.

host: stewart pratt is the president and c.e.o. of the consumer industry association here to talk about credit reports. what is a credit report and how sit formulated? guest: credit reports are a summary of how we manage our various loans. so we'll have mortgage loans, your credit cards, if you bought furniture at a retailer, that would be on your credit report. some public record information if you went through a bankruptcy. and if you had accounts that had been submitted to collections, those would be on your credit report as well. and they're updating about 3 billion a month all of this regulated by a federal statute. so that's i gezz the basics. lenders use them, insurance companies use them. host: why do they peart? guest: probably profoundly for all of us.

we don't get access to credit without a credit report. they tell our stories. they essentially tell the story of our hard work, our responsible management of our finances. and that's really true for the majority of americans in this country. so if i walk into an auto dealership and want to buy a car, they don't know anything about me. we're a highly mobile society. that credit report verifies everything that i know about myself. that i pay my bills on time, and that is why i get to drive off the car lot on the weekend, or i get to buy a new home. host: does it say whether or not you're employed or unemployed? guest: they may have some employment information but there's other sources for verifying whether or not i'm employed. host: and how much weight does it have with that auto dealer or with the banker who is going to give you a home loan? guest: well, they're certainly the very center of lending decisions. lenders need some way of measuring my risk. will i pay my bill? will i pay on time?

how much other credit do i have right now? am i ainl to take on another loan and will that really my whole economy be able to afford that? so they're very, very important to how we get access to loans. host: there have been news reports about those unemployed trying to get jobs and having employers look at their credit report and say i can't hire you because your report is not very good. guest: i think what we're seeing -- yes, we've seen some of that as well. employers first, we polled some of our members to get some context, and we discovered that maybe 5% to 15% of all the screens involve a report. so this is a much smaller slice of the total employment background screening market than most folks think. and i think it's a smaller slice than most of the media would lead you to believe. so they're being used if i'm going to have access to cash,

they're being used when i'm going to have access to other people's property if i'm working, for example, in an investment portfolio management context. should i be a safe and sound person? am i the kind of person who should get that job? much less likely that credit report is going to be used than if i'm stocking a shelf or working construction. host: how many people look at their credit reports and how do you go about doing that? guest: that's a great question. this is financial literacy month so this is a great month to learn about this. every consumer has a right to a free credit report once per year. and you can go to the website, www annual credit report.com, and that website is essentially the order taking mechanism. and i can order a credit report from any one of the three national credit bureaus, eek fax, experience or transunion. host: and this is the government-run site? guest: this is run by our members, but federal law does

require that we, our members, provide this service to consumers. so this has been active since 2004. host: if you go to that site, there's been reports that it can, if you start clicking around on that, that these other type of companies that make money off of your credit report, it can get a little confusing and all of a sudden you're off of this site and on to one of those sites that charge you for your report. so how do you go about staying on in and actually get a free credit report from all the three bureaus? host: well, it is true and there's a reason why the federal trade commission's rules permit some advertising to parallel the ordering of your credit report. one of those reasons is because quite often a consumer may want to look at a credit score at the same time that they're going to order a copy of their credit report. the credit report is the one constant. no matter where i go, no matter what loan, i'm always going to

know that my credit report is involved. but i may want to see a score and learn a little bit how a score operates. but it's pretty straightforward. it's clear where the buttons are. it's clear when you're looking at advertising. the website doesn't redirect you to for-profit web sites. although some of those services are quite good. they can plug me into my report on a year to year basis and give me access to scores and financial management tools and literacy tools. host: and you're group, represents those firms. guest: absolutely. host: so just for disclosure purposes, tell us what is the consumer data industry association? guest: we're a trade association here in washington, d.c. we represent about 250 data companies here in the united states. those companies produce a whole range of data tools, credit reports which are used to estimate risk and a lending decision, identity verification tools which protects us from

identity theft, fraud prevention tools hah help lenders manage theft. a whole raft of risk decisions in this country involve data that our members are putting together and that are making available in a business-to-business context. host: this is a story from the daily finance. most americans have seen the humerous television conversations like free credit report and free score that claim to help consumers protect their credit profiles. it turns out that many who sought to take advantage of those offers for free credit reports were often misled into signing up for credit monitoring services or other products. what is going on here and how are your -- these companies that you're representing responding? guest: well, so we need to pull apart the wheat and the chaff a little bit with what it is. it's a product. it's obviously not your free credit report. again, you go to www.annual credit report.com, and you can get your free credit report

that is your right, my right, under law. if i choose to buy credit monitoring, i think one of the great marketing approaches they've taken is to let me take it for a test drive. and this is important for consumers. i get a 30-day free trial subscription. and all i need to do is remember to cancel the subscription at the end of the 30 days. and i've taken it out for a test drive. did i like it? did it make sense to me? and i didn't have to buy it. host: what is the product? guest: it's actually a suite of different services. credit monitoring is going to send me an e-mail notification if data changes in my credit report. that's pretty thai lord to -- tailored. do i want to know if my address has changed. do i want to know if a collection account has been reported. do i want to know when a new credit report has been reported. getting those kinds of notices allows me to be proactive.

if i haven't opened up a ni account it's a good thing for me to know that. i can look and see what's going on and decide whether i'm potentially becoming a victim of id theft. but there's a lot more. i can see my score. i can ask what if questions. how will that affect my score. financial literacy weist helps me understand how to manage my finances and make me more competitive for good loans. host: stewart pratt is the president and c.e.o. of the consumer data industry association. you testified about this issue last week. we're talking about credit reports and the economy, calling in with your questions now. what are some credit score killers? guest: if you've missed a payment. so if you're not paying your bills on time there's no doubt that's going to have some effect on your score. one 30-day late payment is probably not going to be nearly as severe as going to 60, going to 90 or missing payments on a range of your different loans. so that's one.

and that's i think very intuitive. paying your bills is always a good thing to do. if you overuse credit, so if i have a credit limit of $10,000 but i maintain a balance of $9,000, i've used up 90% of that credit limit. generally credit scores score that adversely as well because it looks like you're bumping up the very maximums of what you've been allowed to have access to. so those are some of the issues that you have to think about. host: first phone call. independent line in georgia. go ahead. caller: i wanted to find out, you're talking about get your credit report and get the score for your report. but actually, what score are you talking about? because i know the fico scores are not included in there because i think isn't right. that's what a lot of these companies go by is your fico score bazed on your credit report. but for some reason you have to

pay extra in order to get those fikeo scores. and i think that should be included as part of your credit report. also, i wanted to make the comment. i had signed up for credit monitoring, and it seemed like a pretty big one because they would advertise all the time. and i never did get an e-mail letting me know, alerting at all. i had applied for a loan and i knew that there was some derogatory information on there that had appeared all of a sudden. and when i called, walked in to cancel my subscription is when i finally got an e-mail saying something happened with my account. so i don't know if i necessarily trust those sites. and who would i report something like that to? host: let's start with the fico score. what is it and as this caller asked, why isn't it included with your free credit report? guest: let's talk a little bit about scores.

credit scores are a different product than the credit report. there are literally thousands of credit scores used in the lending marketplace today. some come from third-party providers. our members produce some of those scores. some come from third-party companies that are such as fico. there isn't one score. and i think that's why it's very difficult to -- let me say it this way. when i think about getting a credit score it's not because i'm trying to get the score that may be used by the lender that i may go see next week. getting a credit score is a teachable moment. it gives me a chance to learn about how scores generally look at credit reports. and that way i una little -- understand a little better how i should manage my finances. an example would be keeping loans open for a longer period of time is good for your score. so if you cancel your loans, for example credit cards and flip them quickly, sometimes

you lose some of the benefit of that history, that credit history. so that's very important. so there really isn't one score. and i think that's why you see companies like fico, you see others in the marketplace and that's because it's a competitive. there's just more than one score. most importantly, lenders often take what comes in from the outside and blend it into their own special sauce, their own underwriting process. so there's no one to one. get a score, i have a number, i will therefore get a certain price. if fact, you could go to three different banks on the same day with the same score, same report and probably get three different offers depending on the risk tolerance of that bank. the bank is the one who makes the final decision, not the credit score. host: if it all comes down to a score no matter how formulated, why isn't that free to the public? guest: i again, which score?

which score are we going to give to the consumer? because it's not just one score. and a lender competes with the lender down the street based on underwriting. so lender number one may have a higher risk tolerance and willingness to do business with a consumer who is riskier. lender two may be somewhat less risk tolerant. and lender three may be very intolerant. so each may offer me a different price. each has a different underwriting process. the credit score is likely a different score depending on whether it's an auto loan, a credit card loan, or whether it's a mortgage loan. so that's why it's so complicate. and by the way, these are software products, so this is no different than, for example, getting turbo tax to analyze my taxes and produce a tax refund. it's no different than an appraiser. i hired an appraiser to look at my house and tell me how much it's worth. the intellectual property of companies, in a competitive

marketplace, so they're not just under the umbrella of a credit bureau. that's why you get the free credit report. it is the one constant. you are always goin going to see the credit report no matter what lender, no matter what score you're going to see used in the transaction. >> zoo this says 720 or higher best for mortgage rates. let's talk about that number. 720. when it comes to your score, your credit score, what is the range? guest: again, that's probably a fico score range. every credit score has a different range. it's good to know these things. it's good to know it's like liking at an act score versus sat score. as we become more informed as consumers, we'll learn better which ranges apply to which scores and which scores make the most sense.

van tadge has a predatory straight forward a, b, c, d. so if i'm 90 to 100 i'm in the best range, 80 to 90, so on. host: do you represent vanityage score? host: they're a wholly owned company of eck we fax. but members do own it zoofplt is fico part? guest: it has been at times and currently it is not. host: the next can call from phoenix. caller: good morning. tunchinge. -- taunching. what i wanted to talk about is the model for scoring is broken. as you noted earlier, one of the things that can advrsly affect your score is if your outstanding balance approaches the maximum loan limit. what the banks are ding is reducing your limit to whatever your outstanding balance is. so you go from, i had scores in the high 800s. i am now in the low 600s.

i haven't missed a payment. i'm running my business well. it's making money. i'm paying everybody. haven't done anything wrong but i can't get a business loan as a result of what my score is. host: reply? guest: there is definitely been a change in lender behavior in the short term. the recession has affected consumers most but many small business owners like the gentleman who just called are affected as well. banks are trying to manage essentially their capital requirements, and so banks are definitely in some cases moving the ceiling down. they're saying, if you had a $15,000 credit limit, maybe tomorrow you'll have a $7,500 limit because we don't want to manage a portfolio that has exposure to unsecured credit. there's nothing on the other end of that card, for example. i think what you're going to find is score developers are updating regularly so they take

vintages of data. so they're seeing the pattern. they'll fold that into the next generation of that score and learn more about whether the ceiling coming down is the same as the floor going up. the gentleman is right, historically the reason for what we call the credit utilization rate has been me, the consumer, increasing the amount of debt that i'm holding by spending. in this case, if the gentleman is holding steady on what he is spending and potentially even paying it down, if the ceiling lowers it still change it is ratio. we're going to learn about that and score developers will iverage rate that into the next generation of scores. so we never say they're broken but scores are always learning because credit behavior changes, what we do as consumers changes. another example would be we don't know what the credit card marketplace will look like going forward. will consumers have on average as many credit cards as theffed historically? will h we be a little more cash society? what effect will that have on the kind of information?

but scores are organic. they learn and they then readjust to the new economy, full. and that's the beauty of the credit reporting system. that data is always being loaded. we're always learning more. the scores are always aligning itself with the kind of credit behavior that we have today. host: do economists look at reports to give us an analysis of the overall economy, the state of our economy by the credit report sns host: i haven't soon that be the kay. so as far as we know, economists are still doing the macro economic analyses if they're looking nationwide. there are some services out there that economists may be looking at that show average scores on a state by state basis or region by region bases is. and there are differences by various states. host: what are they? guest: i can probably direct you to a couple web sites. host: go ahead. guest: i think for example

experian. host: next phone call. caller: good morning. the gentleman sounds pro-business but i'm going to ask you what are your feelings on the president's idea of having a consumer protection agency that's free-standing that could sort of support the individuals out here trying to manage their credit? because it seems as though the credit industry is one of the biggest rip-offs that i've ever -- america's ever faced. and my question is also, how are people able to buy these homes, these expensive homes with credit ratings much lower than they should have been? and no one protested. the banks, the credit agencies, or anybody. so i think we're dealing with a big rip-off agency and i think the consumer needs some help. guest: let's go first to the second of the two questions which had to do with how did somebody end up in a house that

may have been put them a little deeper into the hole than they should have been. and our experience is that's in part because there were different assumptions being made about how to spread risk at the portfolio level. in other words, a bank, for example, many years ago would have held all those mortgages and would have been responsible to manage. but as primary market lenders moved an account, moved a package of loans into what's called a secondary market, there were different assumptions about risk. and so there was an assumption that we could allow consumers to buy a house that at one time one and a half times your income, and then it was two times, then two and a half, and in some cases you saw four, four and a half times your income. so the gentleman is right though that the proper use, the aggressive use of risk management data actually does dial down on those kinds of results. it does, by the way, mean some of us consumers are going to get a no from now and then, we're going to apply for a home

that's bigger than we should apply for. that may not feel good at the time but that's probably a good result because that means i'm not in a home that i'm managing. it makes sense based on my income. to the point about the consumer protection agency, every bank agency today and the federal trade commission, which of course is the regulator for our industry, has a consumer protection component built into it. the ftc is built for consumer protection. so our view historically has been that we should remain under the auspicees of the federal trade commission. that agency has the expertise to oversee us. which we hear from the financial services industry is not opposition to consumer protection but just simply making sure that we call it proden shl regulation but it's the safety and soundness. my deposits, your deposits are sitting in a bank. that is some of the money loaned into the u.s. economy. are the banks good stewards of

my money? are they making safe and sound lending decision sns when they are that's called proden shl regulation. you're doing a good job. consumer protection runs parallel. that's the debate. should the regulation be completely separate or more aligned? the lending scommuent in general said aligning the two still makes sense. but you can still do that and bill a good consumer protection regime. >> zoo are you supportive? guest: our view has been -- the question for us is what would a stand-alone agency mean to us. and our view is more so an argument about expertise. the federal trade commission is a consumer protection agency. we would like to stay with the federal trade commission rather than be transferred to a new agency because the f.t.c. already has teams of lawyers who understands us, who visit with us regularly, who investigate claims made on behalf of consumers. so our view is we already have

a consumer protection agency. you would then have to go to a leppeder and say why would you want to have something other than a stand-alone agency? am i safe and sound? consumer protection. those two ideas should work together very well. host: leroy on the independent line. caller: hello. c-span, i'm so glad that you provide this service that you have. my comment on credit reports or my question is, first, the comment is i think they're highly overrated. and if they're relied on to make loans, the economic collapse that we've had shouldn't be a surprise to anyone. but it seems to me like the current, the way the current credit reports are set up they're prone to many errors on the reports. and many of limittations. like i don't know where the

balance sheet even plays a role in the credit reports and i think that if you're lending money, i would think that would have some value. so i'll just listen to what the caller says. host: your reaction. guest: i would agree with the caller, c-span is a great service. and so let's talk a little bit about what credit reports do and are they accurate. i think that's a great question. and we run into that quite frequently. obviously we start with the view that they are. but it's thot just because we think that or feel that or want to believe that's true. for example, you and i were talking about free credit reports. financial literacy month, good time to look at them. space them over the course of the year, don't order them all at once, that way you can look at credit bureau number one, two, three, spread that over the course of the year. take advantage of your free reports. 150 million credit reports have been issued since the system was brought up. out of that, out of all of

those reviews more than 90% don't have a question. so in other words there is sometimes some difference between the perception that we may have individually about credit reports. and then once we bundle it and look at all the different consumers, the majority are finding their reports are accurate, that they are reflective of who they are. that i work hard, i pay my bills, i'm on time. it reflects my values. there are times where consumers -- and we discovered this particularly with divorce. if an individual is divorced, sometimes judges in divorce courts think that they can sever a contract such as a home mortgage and make one of the two parties responsible. consumers are sometimes disappointed to find that courts can't do that. we've had outreach at different times into the attorney community that represents those who go through divorce to try to educate further on that to make sure consumers understand that if you had a joint account that if you had a joint account before, while you were married,