What is a Credit Report?
Review and Update Your Credit Report

Introduction

Your credit record is one of the most significant segments of the mortgage loan application process. Your credit score can and does affect the terms offered by a lender and that can translate to be money out of your pocket in the form of higher monthly mortgage payments. The cost of borrowing money is the biggest reason why you should ensure that your credit record accurately reflects your past history.

Start by getting a copy of your credit information from Equifax, Experian and Trans Union. Rather than contacting all three (3) companies, obtain a 3-in-1 merged credit report. There are numerous companies that will obtain your credit information from all 3 bureaus for you and merge the information into one report. There is a fee for this service, but it is well worth the expense. The contact below will connect you to one such company and we found their format to be easy to read and understandable.

Not only should you review your credit report record but you should also review your credit score. Currently there is only one bureau providing the consumer with a credit score and that is right from the source.

Improve Your Credit Record, Improve Your Score: Now that you have your 3-in-1 merged report and your credit score from Equifax, read the information that they have provided you on how you can petition to correct erroneous information. Correcting your credit history will often improve your credit score. Generally, your minimum Fair Isaac or "Beacon" score (provided by Equifax) needs to be above the following in order to be considered for a purchase money mortgage: "550" or above for an FHA or VA loan or "620" or above for a Conventional loan.

(Note: Review the "Local Mortgage Pgms" section of this web site for an explanation of FHA, VA and Conventional purchase money mortgages.)

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Minimum Scores

If your scores are above the minimum its time to contact a lender. Have a mortgage loan officer review your credit report (that they call an "endfile") and guide you on ways to improve your credit score. A loan officer can discuss with you, the types of mortgage loan programs for which you qualify in order to better assist you as you develop your plan to buy a home. Contact a Real Estate Answer Team, discuss your credit and score with them.

Required Repairs

If your scores are near the minimum or below, you need to learn what you can do to correct the entries that are adversely affecting your scores and determine how long will it be before you can obtain a purchase money mortgage.

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Life's Challenges

They affect all of us from time to time. The key is to minimize the adverse impact life's challenges can have on your credit record. YOU must be pro-active with your credit record. Bankruptcies, foreclosures, illness, child birth, disabilities, divorce, accidents, loss of employment and money mismanagement to name but a few - can have significant impact on the timely repayment of your installment debt.

Don't despair - fortunately, a pro-active approach, possibly some counseling, and time - will overcome all of the above challenges. Your credit record marks will improve and your credit score will rise again - So take charge NOW!

Dispute the Credit Bureau Entries

Review the information provided in your credit report on disputing erroneous information contained in your credit record. Appeal in writing the accuracy of any entry found in your report in which you disagree. Provide copies of any documentation supporting your claim for correction to any of the three (3) credit bureaus that is providing the erroneous information, not just the company providing you with the 3-in-1 merged report. This process will take anywhere from two (2) to six (6) weeks or possibly longer to complete. Here are the three (3) most commonly used credit reporting bureaus:

• Equifax
• Experian
• Trans Union
  

Correction of Erroneous Entries Contained in a Mortgage Credit Report (3-in-1 Source Report)

On a case by case basis, lenders can often coordinate with the company that provides them with merged credit reports and explain the erroneous information (for that report only), enabling the purchase money mortgage application process to continue. However, the possibility of correcting the erroneous credit information locally greatly depends upon the strength of your documentation and the significance and type of erroneous information reported. If you are successful in obtaining your financing, the correction of the merged credit report may only be local. You should continue the dispute process to the originating credit bureau; provide them with your dispute and documentation and work with them to correct their credit record.

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Overwhelming Challenges

If your credit challenges are beyond your ability to correct the misinformation yourself; then, GET HELP!!! There are numerous non-profit organizations that provide counseling and that will get on the right track. CLICK HERE for a list of HUD offices and organizations in Maryland providing various counseling services.

Money Mismanagement

If you are having difficulty in managing your budget, the following organizations will assist you in developing a game plan to get your debts paid down or paid off and provide you with the guidance that will help you avoid this predicament in the future. They will work with you to reduce your monthly debt payments by contacting your creditors, arranging for a more relaxed repayment schedule, collect your monthly payment amounts from you and pay your creditors for you.

(Note: Be aware that this type of service may require a signed agreement that may prevent you from obtaining a purchase money mortgage until a significant percentage of the original loan balances are paid down. It may take you several years or more depending on the outstanding balances owed before you will be able to obtain a purchase money mortgage.) Contact the following organizations for detailed information on their programs and how they can help you.

• AmeriDebt
• Credit Counselors of Maryland
• National Foundation for Credit Counseling - Local Agencies
• U.S. Military Personnel Overseas - Online Counseling

Summary

Your credit report is an important key to your ability to borrow money. The money you borrow can be more costly to repay than it should be if you don't monitor your credit record and credit score regularly. When you do meet one of life's challenges, be pro-active; ensure that its adverse impact on your credit record is as minimal as possible.

Order a copy of Your Credit Report Today!

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