Whether the credit you need is long term, like a home mortgage or short term, like a new credit card, the lending institutions will look at your credit report to determine your ability to pay back the loan.
Your credit report is gathered from a number of sources. Credit card companies and financial institutions give your payment history to credit agencies. The credit agencies also research public records like court documents that might state legal judgments against you.
There is more than one credit agency and you are entitled to a free credit report every twelve months from each of these agencies. You can get a free on-line credit report from this web site: www.annualcreditreport.com.
It is important to check your report on a regular basis because inaccurate data can harm your credit rating. A free on-line credit report from the web page listed above is a good way to check that the information it contains is accurate. It’s a good idea to put a regular once-a-year item on your calendar and get a free on-line credit report.
Your credit score is will range from 300 to 850, with 850 being perfect credit. The higher your credit score the better lending terms you can expect. It pays to keep your credit history clean. Some factors that will affect your credit rating are:
Your payment history. Do you pay your bills on time? Have you had a bankruptcy? Bad payment records will stay on your credit history for seven years. A bankruptcy will remain for 15 years.
The amount of your debt. If you already have a large car payment, several mortgages and big balances on your credit cards this will lower your overall score.
How long you’ve had credit. Someone with a long credit history will fare better than a person who is just beginning to establish credit.
Have you recently applied for new credit accounts?
If you find inaccuracies in your report, you should contact the credit agencies. Write detailed descriptions of the disputed items in a letter to the credit agency. Keep copies of the letters and send them “return receipt requested.” That way you will know that they received your letter.
The credit agency will usually respond within 30 days. If you do feel that they’ve addressed the issues correctly, you can attach a brief (100 word) statement to your report so that lenders can hear your side of the story.
If the credit agency agrees to make changes, check the report within 60 days. There are many reasons that mistakes might be made and your credit history is too important to leave to chance.
This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.
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