STEP 2
REVIEW YOUR CREDIT
In order to approve your loan, your lender will request your credit report from one of the three credit reporting bureaus. From the credit report your lender will see how much money you owe, how you have paid your bills, and where you have applied for credit.
What is credit history?
Your credit history is a factual record of your payment history as reported by creditors. The information is compiled into a credit report that lenders use to determine your ability to pay back a loan. Your credit history gives the loan officer, or the person reviewing it, a snapshot in time as to your ability to make your loan commitments.
What kind of information does a credit report contain?
Identifying information- A credit report includes your name, current and previous address, telephone number, Social Security number and reported variations, current and previous employers.
Tradeline information (credit accounts)- A credit report also includes the name of any institution that has granted you credit, date account opened, credit limit or loan amount, monthly payment account, and payment pattern (on time and/or delinquent payment trends).
Public record information- Bankruptcy records; state, country, or federal tax liens’ and overdue child support (varies by state).
Inquiries- Name and date of companies that have obtained a copy of your credit history for application, account review, or collection purposes.
It is recommended that you review your credit report from each one of the credit reporting agencies (CRAs) at least once a year. The three national credit reporting agencies are Experian, Equifax, and TransUnion. These three CRAs generally do not share information about consumers, so it is best to review all three credit reports. The accuracy of your credit report is your responsibility. If there is a discrepancy, the credit report will provide instructions on how to correct errors.
The Fair and Accurate Credit Transactions Act (FACTA) was created by the federal government to help you ensure the accuracy of your credit report. FACTA allows you to get one free credit report, from each of the three credit reporting agencies, per year. To help facilitate this, the three CRA’s have collaborated to create one place for you to contact to request your free annual credit reports. To receive your free annual credit report call, write, or go online at:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
Phone: (877) 322-8228
How long does information stay on your credit report?
Tradeline information- Stays on for seven years (delinquency, collection accounts, charge-offs, ect.) from first date of delinquency.
Public records- Chapter 12 Bankruptcy, judgements, and paid liens stay on your credit report for seven years from release date. Chapter 7, 11, or 12 Bankruptcy will be on your credit report for ten years.
Inquiries- Credit inquiries remain on your report for two years.
What is a credit score?
In today’s lending environment, lenders may access and utilize a credit score during the underwriting process. Scoring is a mathematical formula that is solely based upon credit information. Credit scores were created to quickly calculate the willingness of a customer to pay back a loan. The higher the score the better the borrower, and the lower the risk. The lower the score, the higher the risk of lending to that individual.