Most adults have reviewed neither their credit score (55 percent) nor their credit report (62 percent) in the past year, according to the National Foundation for Credit counseling.
A credit score is similar to your overall grade that immediately tells lenders how good you are handling your financial obligations. It shows how good or bad a credit risk you are.
TransUnion, Equifax and Experian are the three major credit bureaus that gather your credit score based on the information they gather from their client companies. They do this with the help of software that calculates your credit scores.
This means that, you have three credit scores from three different credit bureaus. Your credit scores may differ, because they use different software to calculate your credit scores.
Credit scores go from 350 to 850. Generally, a score above 720 is a good score, which can qualify you for a better mortgage rate. The lower your credit score, the harder it is to get a good rate or qualify for a mortgage loan.
Don’t be discouraged if your score is low. You can still point out to mortgage lenders positive things that are not shown in your credit report, such as that high-paying job you just got in the past months, which may help you get approved.
Did you know that under the FCRA (Fair Credit Reporting Act), you are entitled to get a free copy of each of your credit reports annually at your request?
Here are the details about your rights under the FCRA, which established the free annual credit report program:
The three nationwide credit reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Do not contact the three nationwide credit reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228 or mailing to Annual Credit Report Request Service.
You may order your reports from each of the three nationwide credit reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide credit reporting companies every 12 months.
An established, good credit history is necessary for many types of financing, including buying a home. Not knowing your credit score or what’s on your credit report could keep you from buying the home of your dreams.