Your Credit Report
Your ability to obtain a mortgage depends on your financial
habits which are tracked by creditors. Before extending credit,
lenders will want to examine the risk of not getting the money back.
Credit reporting agencies receive information from credit grantors
about how people have paid back bills and other credit obligations
and then provide that information to those who extend credit. From
this information lenders can develop an idea of just how you will
handle your responsibilities once you have signed the contract for
repaying the loan.
There are over 1000 local and regional credit bureaus throughout the
United States. Most credit bureaus are either owned or under
contract with one of the nation's three major credit reporting
agencies:
- Equifax
- TransUnion
- Experian
These national agencies maintain centralized databases containing
the credit records of more than 170-million Americans.
It is advisable to know what's in your credit report before applying
for a mortgage loan. That way, if there are any errors, you can take
steps to correct them before you make your application. It is
estimated that 50% of all credit reports contain errors significant
enough for an individual to be denied a loan! We advise that you
take the time to order your credit reports from all three credit
reporting agencies and make certain they are accurate.
There are basically two types of credit reports available to
consumers, "individual" or "merged" reports. Individual reports are
provided by the three major credit reporting agencies: Experian,
TransUnion and Equifax. Merged reports offer information from all
three of the credit reporting agencies on one easy-to-understand,
credit report.
Examine your credit report carefully to see if it is up to date and
correct. If you find an error, complete the Research Request Form
that is sent along with your Credit Profile, and give details of the
information you believe is incorrect. Include any documentation that
supports your claim. Send it certified mail. The credit bureau must
correct any errors in the report. If there are unsettled disputes
over certain accounts, it must also include your side of the
argument in the report.
If your credit report is accurate and you have a questionable credit
history, you need to start repaying outstanding balances on time in
order to re-establish an acceptable record.
If you need help dealing with your debts, you may want to contact
the Consumer Credit Counseling Service. CCCS has more than 1,200
offices throughout the country. This nonprofit organization can help
you analyze your situation and work with you and your creditors to
establish a repayment plan that will satisfy both you and your
creditors.
If you know you have a credit problem, it may be to your advantage
to talk about it at the time of your loan interview.
If you have not yet established a credit history, begin with
secured credit cards, which are easy to qualify for, apply for
credit with a local retailer such as a department store, and
remember to pay against your balance as soon as you can.
Please also visit our pages on FICO scores, help
on repairing your credit, and how to
request your credit report.
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