Only your FICO score is used by most mortgage companies to check your credit. The FICO score became the gold standard in the mortgage lending world when Fannie Mae and Freddie Mac endorsed its use for evaluating mortgage loan applications in the mid 90s.
The easiest and most convenient site to order your FICO credit scores is through Fair Isaac’s consumer website: www.myFICO.com.
This is the only site where consumers can order all three of their FICO credit scores from all three credit bureaus. You can also order scores from the credit bureau websites directly but you should be aware that you’re not necessarily going to get a score that lenders use.
Learn more by downloading the Understanding FICO Scores Guide from myFICO.
Credit scores measure credit risk. Lenders and creditors use the credit score to determine how much of a risk you are as a borrower or a creditor. You’d be surprised at how your actions as a creditor can affect your credit score. For example, did you know that closing out an account that still has a balance lowers your credit score? Indeed, it does. Read on to find out more behaviors that affect your credit score.
It’s virtually impossible to change your score in the time between when most people decide to buy a home or refinance their mortgage and when they apply. But there are strategies you can live with to make sure your score is as high as possible when you apply for a loan.
Also, make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.
It’s said that by carefully managing your credit, you can add as many as 50 points per year to your score.
Remember, a less-than-favorable credit score won’t haunt you forever. Begin taking the steps to improve your credit score now and enjoy the effects later once your score starts to improve.
For more information on your credit score and how it affects your loan qualification, speak to one of our experienced loan officers.
Theoretically, if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made “consumer-originating” credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what’s on them, and smart consumers shop around for the best mortgage and car loans.
Unsolicited credit card solicitations in the mail don’t count against your credit report, so don’t worry.
Credit report errors occur for a number of reasons but they can all have a negative impact on your eligibility for any future credit. It’s important to stay on top of your credit report to avoid any mistakes made by the creditors and credit bureaus – Equifax, Experian and TransUnion. Some common reasons for credit report errors include:
Your credit report is a record of your credit activities. It lists all of your credit card accounts and loans, the balances as well as your payment history. It also shows if any action has been taken against you because of unpaid bills such as a lawsuit or bankruptcy filing. Because businesses use this information to evaluate your applications for credit, insurance and employment, it’s important that the information in your report is complete and accurate, especially if you plan to make a big purchase like a home.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Under the FCRA, both the credit reporting agency (CRA) and the organization that provided the information to the CRA (usually the credit card company) must correct any errors or incomplete information in your report.
If you do encounter a mistake on your credit report, several steps need to be taken to correct the matter:
A bankruptcy filing delivers a devastating blow to your credit and FICO score, but it doesn’t mean you have to wait 10 years before you can qualify for a mortgage. Many consumers who have filed for bankruptcy have been able to obtain a mortgage, although it is often at a higher rate than someone qualifying for a prime or “A-paper” loan.
While credit card companies may care about what happened before you filed for bankruptcy, many mortgage lenders are more interested in your recovery – what you’ve done since your filing. It won’t happen over night, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past: