We offer an in-office credit counseling option to our Homebuyer Education program participants. Our credit reports reflect information from all three nationwide consumer reporting companies: Equifax, Experian, and TransUnion and show you your merged 3-in-1 report with 3 scores. A counselor will explain the information contained in your report and help you interpret how the report will impact on your housing goals, and if necessary, provide do-it-yourself credit repair education for minor problems.
Importance of Good Credit
Credit is a privilege. When you want to borrow money, the most important thing financial lenders consider is your credit history. A credit report is used as a predictor of your credit worthiness, as it reveals your financial reliability and can be compared to tax/salary documents to determine your current debt to income ratio. Therefore, the lender might conclude that you are a good investment if you pay your bills on time and have manageable debt. If you have problems paying your bills (you forget to write a check for the monthly electric bill, phone bill, or credit card bill, etc.), it indicates that more than likely, you will also have a problem paying your mortgage. In the end, financial institutions may find it difficult to award either a low interest mortgage or any mortgage at all to an applicant with a weak credit history.
Your Credit Score
A credit or Fair Isaac Corporation (FICO) score is a number that lenders use to estimate risk. Experience has shown them that borrowers with higher credit scores are less likely to default on a loan. Credit scores can range from 340 to 900. The higher your score, the less risk a lender believes you will be and the likeliness of being offered a lower interest rate will probably increase. Borrowers with a credit score over 600 are typically offered more financing options and better interest rates; however, don’t be discouraged if your scores are lower because there’s a mortgage product for nearly everyone.
Protecting Your Credit
One of the best ways to protect your credit and keep your scores high is to limit the number of people who have access to your personal information (i.e. Social Security Number). The more you have your credit checked (i.e. co-signing, car loans, cell phones, major credit cards, store credit cards, etc.) the lower your scores drop no matter how consistently you pay your bills. Another way is to periodically look at your report.
Fixing Your Credit
If you are not satisfied with your credit score, there are things you can do for to increase it.
1. Carefully check over your credit report. Make sure that the information is correct. If you see something that you don’t recognize or items that are not yours, report it to the credit bureaus dispute department immediately.
2. If you have delinquent debt, try and make payment and/or settlement arrangements as soon as possible. Make sure to request that all arrangements be put in writing and sent to you. Do not begin making your payments until you read the arrangement agreement and confirm that it correctly states what you agreed to. Remember to obtain and store in a safe place all payment arrangement documents and receipts.
*After so many years, certain negative credit information can be legally removed from you credit report. However, you are still legally responsible to pay the debt.
3. Create a budget and try to stick to it.
4. Pay Yourself First! While it is important to pay your bills it is equally important to save money as well. Maintain a savings program. Even if you only save $5.00 each pay check get in the habit of putting money aside. Savings can provide many benefits such as having money for emergencies (rather than relying on credit) or using your savings as a way of paying off your debt faster.
5. While you are in the process of fixing your credit, try not to incur any further unnecessary debt.
The 4 Types of Free Credit Reports
1. Legitimate companies may offer you a free credit report that includes your scores. However, obtaining this report usually requires enrollment in some type of free trial service that they offer. Some of these services may include unlimited credit reporting, credit alerts when key changes occur, or identity theft insurance, etc. Educate yourself about the services to determine if the plans are right for you. The services may be beneficial for those who want or need to use them. In the event that you change your mind, remember that you must cancel your membership before your free period expires to avoid unwanted charges to your credit card. Otherwise, you will be billed for continuing your membership.
2. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. Obtaining these reports do not require you to give a credit card number or sign up for any particular service; however, these reports only show you your credit history and NOT your FICO Score. You will have to pay an additional fee for your score.
For this report please visit: https://www.annualcreditreport.com
3. Many states have laws that entitle you to credit reports for free or for a reduced price. These reports are in addition to the free annual one that everyone is entitled to. However, these reports only show you your credit history and NOT your FICO Score. You will have to pay an additional fee for your score.
a.Equifax Free and Discounted Credit Report
Check you state HERE
b.Experian Free and Discounted Credit Report
Check you state HERE
c.TransUnion Free and Discounted Credit Report
Check you state HERE
4. Additionally, you are entitled to a free credit report if:
A. You are unemployed and intend to apply for employment in the next 60 days.
B. Within the past 60 days, you received notice of an adverse decision such as denial of credit,
insurance, or employment.
C. You are also entitled to a free credit report if, during any 12-month period:
a. You are on public welfare assistance.
b. You believe your file contains errors due to fraud.
However, these reports only show you your credit history and NOT your FICO Score. You will have to pay an additional fee for your score.