Community Corner
Agent: What You Don’t Know Can Hurt Your Credit
Joan Probala says the best time to check your credit report is before you actually need credit.
When was the last time you saw a copy of your personal credit report? If not recently, it may be time to get a copy, especially if you're considering a real estate purchase in the near future.
Incorrect information can cause long delays in the approval process and can even be the basis for denial of credit, including a mortgage. Mortgage companies are demanding higher scores to protect themselves from additional losses.
The time to check with credit reporting agencies is when you don't need the credit. It can take months to straighten out a problem, and you don't need the added stress during the home buying process.
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There are several major credit reporting companies. Since they operate independently, you might check your report at all of them. If you have difficulty, you can ask for help from your mortgage or commercial banker.
There are several sites that offer an initial free report but only if the consumer subscribes for an ongoing monitoring service. Many of these sites are legitimate and secure but the FTC site www.annualcreditreport.com is the only official free site.
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Regardless of where you get your personal credit report they typically do not include credit scores and when you do purchase the credit scores, they may not be the standard FICO® Score that mortgage lenders use in their underwriting process. Each agency uses different criteria to build a score. Equifax is the only credit bureau that uses the FICO® criteria documenting ranges from 330 to 850. The other bureaus use a different model with results ranging from 501 to 990.
If you want to receive your official free FTC authorized credit report go to www.annualcreditreport.com. If you have already received this report in the past 12 months you would be charged a fee for another copy. Another excellent source to receive a copy of your personal credit report is the FICO® consumer site www.myfico.com
FICO® scores measure risk in the future. Keeping low balances in secured debt, car, home or student loans secured by the government etc., will have a positive effect. High balances in unsecured debt, credit cards, dept stores etc., are a red flag and lower credit scores.
One of the most common misunderstandings homeowners have is that since there may not be a late fee due on the house payment until the 15th of the month, they think it isn't due until then. The house payment is due on the first of every month and will not only be considered late but reported as such if it is received after the first.
Requesting bids from several insurance companies when purchasing a home does not add negatives to your score because it is not requesting more credit. To eliminate any questions resulting from the offers for credit cards in the mail, you can opt out from any future mailings at
www.OptOutprescreen.com
What if you find an error on your credit report? Michael Olden, American Reporting Company, has some suggestions:
- Contact the creditor and speak with a creditor manager
- If they find the error, ask for a correction letter on company letterhead
- Request that the correction be sent to you and to the credit bureau
- Upon receipt, forward a copy to the credit bureau as well adding any supporting documentation
Contact info for credit reporting agencies:
EQUIFAX
800-525-6285