Checking Your Credit Reports and Credit Scores
Checking your credit reports and credit scores - before buying a home
For anyone getting ready to enter the home buying process, it is critical that you access and study all of your credit reports as early as possible. You need to allow time for corrections to be made before a potential lender checks your credit. It is essential that your credit reports and credit scores provide a positive image of the way you manage your debts since they have a huge impact on the interest rate a lender will offer you.
What types of credit reports are there?
There are four types of credit reports available to consumers: Online Credit Reports, 3-in-1 Credit Reports, Printed Credit Reports, and Free Credit Reports. Each type of credit report is discussed below.
1. Online Credit Reports
First off, there are three major credit reporting agencies: Equifax, Experian, and TransUnion. Each of these credit reporting agencies offers a fee-based plan to check your credit report online. The credit reports generated by each agency are displayed in a different format, but each report contains the same basic details and information. However, don't be surprised if the actual details about your past and present history differ slightly on each report. After all, you are getting information gathered by three independent agencies.
There are also other companies that are licensed to provide reports and scores based on the information collected by the three major credit reporting agencies. The most popular of these companies is MyFICO.com.
It’s a good idea to get all three versions of your credit report - either independently from each of the major credit reporting agencies or from a company that is licensed to provide reports and scores based on the information collected by the three major credit reporting agencies. Let me give you a simple example of why you want to do this. The first time I checked my own credit reports, I discovered that one reporting agency listed two social security numbers for me and showed a student loan as an open account with a balance due, even though I had paid off the loan 14 months prior. The same reporting agency listed my wife's maiden name, but not her married name. It also showed her current address at a home she hadn't lived in for 15 years and a past address in a city where she had never lived.
Had I not checked and compared all of my credit reports, I would not have known of the errors. Although the errors were eventually corrected, it definitely wasn't a same day procedure. Even if it takes a while, it is important to get any mistakes handled as quickly as possible. The cleaner your credit reports are, the fewer questions your lender will ask. Can you imagine the concern my lender would have had had they seen my credit reports showing different social security numbers and my wife's credit reports showing different last names and current addresses? It would have been a disaster!
There are many report variations offered to consumers by each agency. These include:
A credit report with no credit score.
A credit report that includes your current credit score.
A 3-in-1 credit report that lets you see a side-by-side comparison of records from all three agencies, with or without scores.
Other products, including subscriptions that allow you to access your report on a regular basis, services that notify you when your credit history is requested, and daily and weekly notification of all changes to your file.
When requesting your online credit reports, you will be asked to establish a username and password by each agency, as well as to verify your social security number. Each agency will also ask you a series of multiple choice questions about your credit history. All of this is designed for your protection to ensure you are who you say you are.
It's important to note that TransUnion and Equifax reports can be viewed for 30 days. However, Experian's report disappears the moment you logoff so be sure to print it out before you exit.
2. 3-in-1 Credit Reports
As previously described, a 3-in-1 credit report lets you see a side-by-side comparison of records from all three agencies, with or without scores. In tests conducted by third party examiners, the information pulled from each agency was found to be the same as the data found on its Web site. The credit scores generated by each agency for the "other" agencies (i.e., the agencies that did not actually sell the report), however, were not the same. Based on these results, it may be more beneficial to order individual reports from each agency and get scores that are more accurate rather than rely on a single 3-in-1 report.
3. Printed Credit Reports
Printed credit reports are simply mail order requests. When ordered by mail the cost per credit report varies between $8 and $10. Many states, however, give consumers the right to receive a report at a reduced rate. You can check one of the three major credit reporting agencies Web sites to find out if the laws in your state offer discounted reports.
When making a mail order request be sure that you include the following:
Your payment
Your full name and address
Your Social Security number
Your current address and most recent former address
For current mailing addresses of each credit reporting agency visit each agency's Web site.
4. Free Credit Reports
Certain circumstances entitle you to receive a free credit report. You are entitled to a free credit report if:
You have been turned down for credit or employment (due to your credit report) during the past 60 days.
You are unemployed and plan to apply for unemployment benefits within the next 60 days.
You believe your credit report contains fraudulent information.
You are on public assistance.
Checking your credit reports and credit scores is an important part in the home buying process. If you are a home buyer seeking a mortgage you need to access and study your reports as early as possible. Don't waite until the lender checks your credit history to discover mistakes.
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