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How Credit Reports Work
Your credit report affects all aspects of your financial
activities. It has the ability to affect the job you get, the
apartment you rent, and even the ability to open a
bank account.
Your credit report itself is a listing of your consumer
debt and at times your mortgage. The two main credit
reporting agencies are Trans Union and Equifax. Both
agencies have a credit history file on anyone who has
ever borrowed money.
Reporting Your credit providers report at different
times to the credit agencies. Lenders will report
statement balances, credit limits, late payments,
required payments and more. In addition to credit
information, you will also find liens, judgements as well
as your address and possibly your work history. If you
find an error you have the right to dispute the error
and to make a note on your report.
Access You have the right to get a free copy of your
credit report at any time. It is a good idea to check your
credit every so often to make sure it is accurate.
Anyone that accesses your credit report must have
permission from you to do so.
Credit Scores There are different types of credit
scores based on the report the lender requests. Each
has it’s unique way to calculate your score. A Beacon
Score is the credit rating that most mortgage lenders
use as an idea of your lending risk. The higher your
credit score the better. The score that you have access
to yourself for a small fee is your Risk Score which may
be lower or higher than your Beacon Score.
Score Factors The aspects that determine your score
are the number of credit accounts, payment history,
use of credit accounts, length that credit has been
established, types of credit accounts and number of
credit inquiries.
Lender Use The lender and mortgage insurer will look
at both your score and your credit history. If you have a
high score but show recent late payments without a
valid excuse and/or a limited amount of reporting the
lender may consider you higher risk.
Changes The good news is that your credit report is a
working document. This means that you have the
ability over time, to repair any damaged credit and
increase your credit score. Check out our tips to
improve your credit.