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Credit Scores

If you’ve been researching real estate and mortgage possibilities, you’ve seen the term “Credit Score”.  There are three main credit reporting agencies in the US; Equifax, Trans Union, and Experian.  These are the agencies to whom your creditors report any activity on your accounts.  Your credit report shows how much you owe and to whom, as well as whether or not you make your payments in a timely manner.

Each agency in turn uses a formula to determine your overall credit rating, knows as your credit score.  Higher scores indicate better credit than a lower one.  For the time being at least, no one knows how the agencies compute the scores and they aren’t telling.  That means your score will actually vary between agencies.  There has been talk of switching to a uniform equation and possibly even sharing it with consumers.

In the meantime the Federal Trade Commission (FTC) now requires that each agency provide a free credit report to everyone requesting it once a year.  Usually, however, they charge you a fee to see your credit score.  Whether you choose to pay for the privilege or not, you should examine each of your reports annually to check for errors.  You just never know what a third person is saying about your spending activities.  Not only that, but identity theft is rampant and you can quickly determine if someone else is charging items to your accounts, or even opening new ones without your knowledge.

What To Look For 

Here are the main things to check for accuracy on each of your credit reports:

ü    Is your SSN correct?  This is mainly how each of us is identified so it is of the utmost importance that it is correct.

ü    Is your name spelled correctly and do they list the right address?  If you’ve moved within the last 2 years, your former address should also be on the report.

ü    Does it show your employer and job title correctly?  Again, if you’ve worked there less than 2 years, the position before this one should be listed.

ü    Is your phone number correct?

ü    Are there payments you’ve made on time that show as late or not at all?  If so, contact the credit reporting agency, tell them about the discrepancy and find out how to send them proof to correct the information.

ü    Some creditors only report to one or two of the Bureaus.  If you want the information of your good standing to show on all three, you can either ask your creditor to include them or send the missing agency copies of your up-to-date statements.

This may seem like needless hassle to you, but if you apply for a mortgage only to be turned down for invalid reasons, you’ll realize why it is so important to stay current with your credit reports.  In fact, if you’re even thinking about buying a home, it would be a good idea to send for all three reports before you start looking.  Allow several months so you can get any errors corrected before your mortgage application.  It often takes that long to straighten out mistakes.  The old adage about “better to be safe than sorry” really applies here.  What if you lost your dream home over a foolish mistake on someone’s part?  You’d be heartbroken and doubly so since it didn’t have to happen that way.

** Update as of 10/7 - A great suggestion was made a friend and activerain member Erik Hitzelberger which is to pull from one bureau every 4 months.  This will allow you to check your report 3 times a year for free.  The website which allows you to do so is www.annualcreditreport.com.  Thank you Erik! **

Watch for my next post regarding “Building Credit”

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Are you are looking to buy or sell a home in Frisco or another city in North Texas?  If so, then I can help.  I am a licensed Mortgage Consultant located in North Texas with over 15 years experience in the industry.  I can help you get pre-approved for your new home loan in Texas and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call any time or visit my website for more details.

John Cannata    p# 214.545.5604  

www.TxMortgageConsultant.com