When you start shopping for a mortgage you quickly discover that no one will talk to you until they have your credit report and your credit rating. You're not just a number anymore ... you're lots of numbers. Well, you're more than a number to us. You're letters. And customers. And friends.
What is a credit report?
A credit report is a record of an individual's credit payment history. Its main purpose is to help a lender quickly and objectively decide whether to loan you money.
If you have any type of a charge account, car loan, student loan or home mortgage, then information about you is stored in a consumer credit database. Most of the information comes directly from the companies you do business with, but some information comes from public records.
What is a credit score?
A credit score is a numerical representation of a consumer's credit. The most popular credit score is a credit bureau risk score that is based on what is in your credit report. Your credit report is analyzed for factors that have been found to predict creditworthiness. The resulting score assesses the likelihood that you will repay a loan or credit card on time. So, the higher the score, the more likely that you will be approved for credit, possibly with a better rate than a low score. Anytime information changes in your credit report, your score will change. If you have a short or incomplete credit history, it may not be possible to calculate a score.
Your credit score is on a scale from 450-850, and is a combination of the information from the three major credit bureaus (Equifax, TransUnion, and Experian).
Sound confusing?
It is. But it's not. Well, yes and no.
Let us help - we're in this together. Sometimes we recommend you obtain your credit score directly (this helps save you money and you can reuse the information if you would like to shop for mortgages with other brokers) and we'll walk you through the process. Sometimes, we just take care of it. We'll advise you based on your needs and situation.
You are allowed one free report each year. Go to www.annualcreditreport.com for an easy way to gauge how lenders will view your creditworthiness, and check for any inaccuracies that should be corrected. You can also get your credit score (a composite of the three reporting bureaus) on this website, but there is a fee for that.
And don't worry, checking your own credit will not lower your credit score.
Creditworthiness is close to Godliness. Well, it's an important tool, anyway, and it's good to understand a little about it and how your actions can affect it.
Read more about credit reporting.
To contact the three major credit bureaus:
Equifax
P.O. Box 105873
Atlanta, GA 30348
www.equifax.com
(800) 685-1111
Trans Union
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
www.transunion.com
(800) 916-8800 or (800) 888-4213
Experian (formerly TRW)
P.O. Box 2104
Allen, TX 75013-2104
www.experian.com
(888) 397-3742
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