Understanding Your Credit Score
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Ever wondered what you could do or not do to improve your credit score? Credit scores reflect a person’s credit history and pattern. When you apply for a mortgage or other type of loan the Bank or Creditor is taking a snapshot of your credit life at a particular moment in time. The average consumer’s credit picture does not change dramatically from one quarter to the next. Therefore, in my experience, it is a good idea to check your score at least six months before applying for a home loan in the event you have credit issues that need to be addressed. You are entitled to a free credit report once a year according to the Fair Credit Reporting Act (FCRA). This law requires each of the nationwide consumer
reporting companies — Equifax, Experian, and TransUnion — to provide you with a
free copy of your credit report, at your request, once every 12 months.
The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Because nationwide consumer reporting companies get their information from different sources, the information in your report from one company may not reflect all, or the same, information in your reports from the other two companies. That’s not to say that the information in any of your reports is necessarily inaccurate; it just may be different. FICO ScoreA lender will generally use your FICO credit score when making a determination on your mortgage loan approval along with other lending criteria. At this point you may be wondering how your FICO score is defined. Generally, most scoring models use the following information and assign a weight to each:
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