To check your credit history, the lender will order a copy of your credit report and credit score from the three major credit bureaus: Experian, TransUnion, and Equifax. This is how the lender determines how you have handled other debts and how likely you are to repay your home loan.
It is a great idea to review your credit report before you purchase a home.
- 1. Request Your Credit Report. To order a copy of your own credit report, visit www.annualcreditreport.com. A free copy is made available once every 12 months. It will not include your FICO credit score.
- Review Your Credit Report. Your credit report includes the following:
- Identifying information (name, current address, social security number, date of birth)
- Your credit accounts (credit cards, car loans, etc.)
- Public information such as bankruptcies, foreclosures, tax liens and judgments (will be listed on your report under the public record section)
- Credit inquiries initiated within the past two years
Review all information to make sure there are no errors. Housing Counselors working for a non-profit, government entity, or community based organization can also provide you a copy of your credit report as well as guidance when reading through it. Find a counselor near you.
- Order Your Credit Score. Home buyers can obtain a copy of their credit report and FICO score by visiting www.myfico.com. There is a charge for obtaining your FICO score.
What is a Credit Score?
The credit score is a number grade attached to your credit report. Creditors consider your score when deciding whether to approve your application for a loan or credit card as well as how much credit to extend and at what interest rate. The higher your score, the better. Scores range from 300-850.
What Determines Your Credit Score?
- Your payment history - What is your track record paying bills on time?
- The amount of outstanding debt - How much is too much?
- The length of your credit history - The longer the better.
- The types of credit you use – Is it a healthy mix of installment, credit cards, etc.?
- New Credit - How many new accounts have been opened lately? Too many in a short period of time can be trouble.
No Credit or Bad Credit? Beware of “Quick Credit Fixes”. Most of the companies that make these claims charge you money for things you can do on your own. Nonprofit financial counselors are available to help you for little to no cost. Find a counselor near you.