HomeUnderstanding Your Credit Report
by Randall F. Brahe, Jr.
One of the major areas a lender looks at when taking a mortgage applicationis the buyer's credit history. The credit report provides an overview ofa borrower's current and past debts and obligations, and is a key factorin the lender's decision making process.
It is important to understand the significance of credit and the reportingprocess. Credit bureaus are organizations that collect and report informationfurnished to them by banks, retailers and other credit providers. The informationis simply reported, not analyzed by the bureau. Information includes thebalance of each account, the amount due, current or delinquent status ofthe payments and actions taken to collect the account. Each time your creditreport is requested, the inquiry request is noted on your file for a sixmonth period.
Credit reports sometimes contain errors, and consumers need to take actionsto correct incorrectly reported information. The Fair Credit Reporting Actrequires credit bureaus to correct incomplete or inaccurate informationat no cost. Correspondence and documentation supporting your claim mustbe submitted to each credit reporting agency to so that they may investigatedisputes in a timely manner. If there is no resolution, the consumer mayfile a statement of up to 100 words to explain their position. There arethree credit bureaus: TRW, Equifax and TransUnion.
Derogatory credit information remains on your report for up to sevenyears; bankruptcies, judgements and repossessions remain on the report upto 10 years. If you have been denied credit based on information in yourreport, you may request a copy. If you are like most consumers, you havenever seen your credit report. TRW offers one free report per year, writeto this address to request the information:
TRW Consumer Assistance, 660 North Central Expressway, P. O. Box 949,Allen, Texas 75002, (800) 682-7654.
Today, many lenders are more flexible with credit requirements so thatthey may work with potential homebuyers at all income levels. If you havea problem with your credit history, contact your lender for help.
Randy Brahe is Regional Vice President with First American Real EstateInformation Services, with corporate headquarters in Uniondale, New York.