It’s a credit driven society we live in, but don’t let CREDIT drive YOU!
The first step in managing your credit is to know what your credit report says about you.
QUICK TIP #1: It’s not ERROR free
Find, look at, double check, and MONITOR your credit reports. Obtaining copies of your credit reports is easy. The 2003 Fair and Accurate Credit Transactions Act guarantees everyone one free credit report from each of the main credit reporting agencies. You must request your free credit reports through a centralized source. To order online, visit www.annualcreditreport.com. By phone, call (877) 322-8228. Or you may request it via US Mail by writing: Annual Credit Report Request Service, P.O. Box 105283, Atlanta, GA, 30348-5283.
2 more ways to receive a free copy of your credit report
• If you applied for a loan and were turned down, you can request a copy by writing the correct credit bureau within 60 days of the rejection. With your request, you should include a copy of the declined loan application.
• You can also get a free report if you are unemployed; planning to apply for a job in the next 60 days, receiving public welfare assistance or believe the credit file contains mistakes resulting from fraud.
If you wish to purchase your credit report (beyond your free copies), request a copy from each of the three credit bureaus:
• Equifax – 800-685-1111 www.equifax.com
• Experian – 888-EXPERIAN (888-397-3742) www.experian.com
• TransUnion – 800-916-8800 www.transunion.com
NOTE: If you are about to apply for a home mortgage, it's important to give yourself time to correct mistakes or make good on delinquent accounts. You should check your credit at least three to six months before you apply for a mortgage. Make sure the following information is correct:
• Your name or names, if you are or were married
• Social Security number
• Date of birth
• Addresses of places you've lived
• Names of places you've worked
• Pending accounts and accounts that have been closed
• Records of delinquent payments or other problems (i.e., make sure they're not mistakes)
Next, make sure nothing has been on the report longer than is allowed by law:
• Bankruptcies must be taken off your credit history after 10 years
• Suits, judgments, tax liens and most other kinds of unfavorable financial information must be dropped after seven years. If unpaid, tax liens can remain on the report for up to 15 years*.
If you find mistakes on your credit reports, you can dispute them. You will need to fill out the form that comes with the report. The process takes time because the creditors have 30 days to respond to a
charge of a discrepancy, or 45 days if the dispute regards data in your free annual credit report. As long as a charge is in dispute, that dispute will show up on your report. Long-time lenders say it's common for reports to have errors. Some estimate that as many as 80 percent of all credit reports have some kind of misinformation.
Now, that you've read your report, dispute any mistakes you find by contacting each of the credit bureaus that report the error. Experian, TransUnion and Equifax allow you to do this online, but you may also submit your dispute by phone or mail.
If you suspect fraud, get a fraud alert placed on your credit file by contacting the fraud department of the credit bureau and explaining the situation. Alert other appropriate agencies as necessary. While you can't delete negative but accurate and verifiable information, you can submit a 100-word consumer statement that explains the reason for the negative data. Your explanation will remain on your credit file until you remove it or until the data in dispute gets removed.
*Source: www.bankrate.com and The Fair Credit Reporting Act
QUICK TIP #2: Get in the Driver’s Seat
Tips for improving your credit scores. Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a mortgage loan and what your loan terms will be. So, take the driver’s seat and keep your credit score high by doing the following:
- Monitor your credit report and dispute errors. Errors in your report will usually translate into a low score. (See information above on Tip #1 on how to dispute errors.)
- Pay your bills on time even if it means you can only pay the minimum amount due.
- Low balances are a positive factor in scoring models. Don't use all your available credit.
- New credit applications can detract from your score. Even an application for a department store card can lower your score. Multiple applications can have a devastating effect on your score, especially around the time you are applying for a mortgage. So wait to charge that new fridge or furniture until after the loan is approved.
- Old accounts (even those you haven't used for a long time) can help your score. Scoring models look at not just how to use credit today but also how long you have used credit.
- Consolidating balances or moving debt around may make for one easy payment, but this can have an adverse effect on your score. Shuffling of balances could be especially harmful to your score if you close established accounts and open new accounts to consolidate your debt.
- Know the going interest rates. Current rates for mortgages, car loans, and other consumer credit are published in daily newspapers or can be found online at such sites as www.bankrate.com. If you have a good credit score but are not offered a good interest rate, ask questions, negotiate, or shop elsewhere.
- Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
- Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
- Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.
*Source: Fannie Mae Foundation www.homebuyingguide.org and NAR
To contact a mortgage professional that can help you get started preparing your credit for a mortgage, contact www.CenturionMortgage.com or call 214-638-0228.