How to read your Credit Report

Your credit is a crucial part of the Home-buying equation. 

Your credit score not only determines IF you get a home but how much it will cost you,it determines your rates quote as well.

Before we get started, go ahead and print this tip
so you have it for future reference…

You may think your credit situation is hopeless. Just
remember that there is always the chance to improve it, even under
the most challenging of circumstances.

Don’t worry, we help everyone that comes to us.

The majority of our customers become homeowners.  Bad credit can be overcome.

Credit reporting agencies, or credit bureaus, collect information
about consumers’ financial affairs and sell that information to
their business members, such as credit grantors, employers
and insurance companies. The credit bureaus normally charge
annual fees as well as a fee for each credit report requested
by members.

The first step in the process is to get a copy of your credit report.

Go here to get a copy of your  credit report and FICO scores now:

There are three credit reporting agencies in the country:
Equifax, Experian, and TransUnion. However, not every
creditor reports to every credit bureau. For example, Visa
may report to Equifax while your credit union reports to
TransUnion and your auto loan company reports to all 3 bureaus.

Credit bureaus obtain their information from three major

1. Consumers supply information, primarily from filling
out application forms for credit.

2. Public records provide information on such matters as
bankruptcies, court judgments, foreclosures and agreements

3. The major credit grantors and collection agencies
regularly send their credit files electronically to the
credit bureaus, resulting in files that include the
account number, outstanding balance, and a nine point
scale indicating whether a payment was made on time or

You must first know how to read your credit report. The
grid below will show you what the letters and numbers on
your credit report mean.

Most credit reports use the same codes to report
information. Knowing what the codes mean can help you
interpret your credit report.

Type of Account

O = 30-, 60-, or 90-day account

R = Revolving open-end account

I = Installment and/or mortgage account

Numerical System

0 = Too new to rate: Approved but not used

1 = Pays (or paid) within 30 days of billing; pays account
as agreed

2 = Pays (or paid) in more than 30 days, but not more than
60 days

3 = Pays (or paid) in more than 60 days, but not more than
90 days

4 = Pays (or paid) in more than 90 days, but not more than
120 days, or three or more payments overdue

5 = Account is at least 120 days overdue, but not yet
rated 9

7 = Making regular payments under wage earner plan of
bankruptcy act or similar arrangement

8 = Foreclosure or repossession

9 = Bad debt; placed for collection; suit judgement; skip

History Rating

0 0 0
$ $ $
30 60 90

How many times payments are 30, 60, or 90 days late.

If you have had a bankruptcy or other credit issue there
is a strong possibility that your credit report is
incorrect. Many bills that were included in your bankruptcy,
or bills you paid in the past, may still be showing up as past
due. Often you may find collections on your report from medical
bills you thought were paid by your insurance company.
The good news is that you should be able to correct these
issues with a few documents and letters.

Correcting Errors on Your Credit Report

Make sure the following information is correct: Your name;
or names if you are or were married; Social security
number; Date of birth; addresses of places you’ve lived;
names of places you’ve worked; pending accounts and
accounts that have been closed.

Ensure that nothing has been on the report longer than is
allowed by law:

*Bankruptcies must be taken off your credit history after
10 years;

*Suits and judgments, tax liens, arrest records, and most
other kinds of unfavorable information must be dropped
after 7 years.

Any error that you find must be investigated by the credit
bureau with the creditor who supplied the data. The bureau
will remove from your credit report any errors a creditor
admits are there. If you disagree with the findings, you
can file a short statement in your record giving your side
of the story. Future reports to creditors must include
this statement or a summary of it.

The Fair Credit Billing Act requires creditors to correct
errors promptly and without damage to your credit rating.

The law defines a billing error as any charge for
something you didn’t buy or for a purchase made by someone
not authorized to use your account; for something that is
not properly identified on your bill, or is for an amount
different from the actual purchase price, or was entered on
a date different from the purchase date; for something
that you did not accept on delivery or that was not
delivered according to agreement.

Billing errors also include: errors in arithmetic; failure
to show a payment or other credit to your account; failure
to mail the bill to your current address, if you told the
creditor about an address change at least 20 days before
the end of the billing period; questionable items, or any
item for which you need more information.

Once you have written about a possible error, a creditor
must not give out information to other creditors or credit
bureaus that would hurt your credit reputation until the
matter is resolved. Until your complaint is answered, the
creditor may not take any action to collect the disputed

As of December 1, 2004 the Fair Credit Reporting Act
allows you to get one free comprehensive disclosure of all
of the information in your credit file from each of the
three major credit bureaus once per year.


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