How To Check Your Credit Report
Determine how your credit stacks up by checking your report regularly. When youre familiar with the information on your credit report, youll have a better idea of what to expect when you apply for an auto loan.
You can request a free credit report from each of the three credit bureaus, TransUnion, Experian, and Equifax , every 12 months.
What If Im Denied Credit Or Insurance Or Dont Get The Terms I Want
Under federal law, a creditors scoring system may not use certain characteristics for example, race, sex, marital status, national origin, or religion as factors when figuring out whether to give you credit. The law lets creditors use age, but any credit scoring system that includes age must give equal treatment to applicants who are older.
You have the right to:
Know whether your application was accepted or rejected within 30 days of filing a complete application.
Know why the creditor rejected your application. The creditor must
- tell you the specific reason for the rejection or
- that you are entitled to learn the reason if you ask within 60 days.
Learn the specific reason the lender offered you less favorable terms than you applied for, but only if you reject these terms. For example, if the lender offers you a smaller loan or a higher interest rate, and you dont accept the offer, you have the right to know why those terms were offered. Read to learn more.
If a business denies your application for credit or insurance because of information in your credit report, federal law says the business has to
- give you a notice that includes, among other things, the name, address, and phone number of the credit bureau that supplied the information.
- include your credit score in the notice if your credit score was a factor in the decision to deny you credit or to offer you terms less favorable than most other customers get.
If you get one of these notices:
What Information Is On The Central Creditregister
Loans for 500 or more are included on the Central Credit Register.
From June 2017, it includes:
- Amount of next payment
Consent for a lender to check your credit history
When you apply for a loan, the lender must check the Central Credit Registerif the loan is for 2,000 or more.
Lenders can also check the Central Credit Register if the loan applicationis for under 2,000 or:
- You have requested a re-structure of an existing loan
- There are arrears on an existing loan or a breach of a limit on a credit card or overdraft
Your consent is not required for lenders to check the Central CreditRegister.
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What Is A Good Credit Score For A Credit Card
Like other lenders, credit card issuers will consult your credit score to determine the risk of doing business with you before approving you for a new credit card. If you want to open a premium travel rewards credit card, you may need good and perhaps even excellent credit scores to qualify. For other types of credit cards, even some with 0% introductory APR offers, a good credit score may be sufficient to be approved for the card.
Beyond qualifying for a credit card, your score can also have a significant impact on the APR and other terms of your account. Credit card issuers not only rely on credit scores to help them determine whether or not to approve applications, but they also use scores to set the pricing on the accounts they approve.
Take this list of top credit cards, for example. Youll notice that every credit card offer features not a specific rate, but rather an APR range. A card issuer might advertise an APR of 13.49% to 24.49%. The reason for that range is because the card issuer will base the final rate it offers you on the condition of your credit.
Defining a specific number that a credit card issuer defines as a good score is tough for two reasons:
Request Your Free Medical History Report
You have the right to get one free copy of your medical history report each year. You can request a copy for:
- Someone else, as a legal guardian
- Someone else, as an agent under power of attorney
Request a medical history report online from MIB or by phone at 1-866-692-6901.
Not everyone has a medical history report. Even if you currently have an insurance plan, you won’t have a report if:
- You haven’t applied for insurance within the last seven years
- Your insurance policy is through a group or employer policy
- The insurance company isnt a member of MIB
- You didnt give an insurer permission to submit your medical reports to MIB
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How To Improve Your Credit Score:
Another common question when dealing with credit scores is What can I do to improve my score? There are many ways to improve your credit score to the higher end of the scale. Some of these methods include:
- Cleaning up your credit report
- Paying down your balance
- Negotiating outstanding balance
- Making payments on time
Credit.org offers consumers help in managing multiple payments. With a Debt Management Plan, you have the possibility of joining these payments into one lump sum with a lower interest rate. Learn more by reaching out to one of our today!
If The Information On A Credit Reference File Is Wrong
If you think any of the information held on your credit reference file is wrong, you can write to the credit reference agencies and ask for it to be changed. But you can’t ask for something to be changed just because you don’t want lenders to see it.
You can also add extra information about your situation. For example, you can add information if you have had a past debt but have now paid it off. This is called a notice of correction. This might help you if you apply for credit in the future.
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How Long Is My Initial Credit Score Used To Qualify Good For
Your initial credit report is good for 120 days and determines your loan eligibility and interest rate. If your mortgage loan does not close in 120 days, the lender will pull a new report and that score becomes the official one for your file.
Prior to closing, most lenders perform a quality audit and pull your credit report again. They look for these things:
- Inquiries that could mean youre shopping for credit and taking on more debt than you disclosed on your application
- New accounts that might make your mortgage less affordable
- Derogatory items that mean youre not a good risk
Any of those issues would, at best, send your application back to underwriting and delay your closing. At worst, these surprises could kill your home loan approval.
Impact If Credit Scores Dropped During Underwriting Process
Worried about if credit scores dropped during the underwriting process? No need to worry. Many mortgage loan borrowers often question which credit scores mortgage lenders will use to qualify them for a home loan. This is because credit scores always fluctuate. As mentioned earlier, your credit card balance will cause volatility in your credit scores. A maxed-out credit card will definitely plummet consumer credit scores.
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The Bottom Line: Take Control Of Repairing Your Credit Score
The best route to a better credit score when looking into a home loan? First, know what makes a good credit score, which is a range between 670 739. Then, know what makes up your score, including payment history, current loan and credit card debt, length of credit history, credit account diversification and recent activity.
As we covered earlier, you can improve your credit score by taking the following actions or any combination of steps:
Theres no quick fix that will fix your credit to buy a house overnight. However, there are plenty of small steps you can take every day that will lead to a better score over time.
Ready to get started on your home search? Check out more premortgage tips recommended to ensure the process goes smoothly! If you have additional questions, its important to work with a financial advisor before making any big financial moves.
Take the first step toward the right mortgage.
Apply online for expert recommendations with real interest rates and payments.
Why Do Lenders Need My Credit Report And Score
7-minute readAugust 13, 2021
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If youre applying for a loan, it makes perfect sense to shop around and see where you can get the best terms. When you call a lender though, theyll likely want to pull your credit to get a look at your report and score before giving you rate information.
The aim of this post is to help you understand why lenders are interested in your credit and what theyre looking for, as well as debunk a few myths around the impact of credit inquiries on your overall score.
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What Affects Your Credit Score
On the list of what affects your credit score, two factors have the biggest influence: Payment history, which is whether you pay on time, and credit utilization, which is how much of your credit limits you have in use.
Other factors matter but carry a little less weight: how long you’ve had credit, whether you have a mix of credit types and how frequently and recently you’ve applied for credit.
Consent And Credit Checks
In general, you need to give permission, or your consent, for a business or individual to use your credit report.
In the following provinces a business or individual only needs to tell you that they are checking your credit report:
- Prince Edward Island
Other provinces require written consent to check your credit report. When you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply for credit. They can also access your credit at any time afterward while your account is open.
In many cases, your consent also lets the lender share information about you with the credit bureaus. This is only the case if the lender approves your application.
Some provincial laws allow government representatives to see parts of your credit report without your consent. This includes judges and police.
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You May Have No Credit Scores Even If You Have Open Accounts
If your open accounts are old and you havenât used them in the past two years, you could have no score. This is true for accounts that you have closed, or accounts that donât report to the credit agencies. One way to make sure your data is contributing to a score is to reopen old accounts or only do business with lenders that report to the three major credit bureaus.
Why Do Credit Scores Matter
Ultimately, your credit score is important in many ways. To give just a few examples:
- Your credit score determines the types of loans you can get
- It determines the mortgage interest rates you pay
- It affects how large of a house or how expensive of a car you can afford
- Insurers in most states use credit scores to set premiums for auto and homeowners coverage. Policyholders with bad credit scores often pay more
- Landlords use credit scores to decide who gets to rent their apartments
- Cell phone companies might require a deposit if your credit is too low
Whether youre looking for a mortgage or any other financial product, your credit score makes a big difference. Thats why its so important to know yours before you apply.
What Exactly Happens When A Mortgage Lender Checks My Credit
The credit check is reported to the credit reporting agencies as an “inquiry.”
Inquiries tell other creditors that you are thinking of taking on new debt. An inquiry typically has a small, but negative, impact on your credit score. Inquiries are a necessary part of applying for a mortgage, so you can’t avoid them altogether. But it pays to be smart about them. As a general rule, apply for credit only when you need it. Applying for a credit card, car loan, or other type of loan also results in an inquiry that can lower your score, so try to avoid applying for these other types of credit right before getting a mortgage or during the mortgage process. Learn more about credit scores
What Does This Mean When I Apply For Credit
Any application for credit might be subject to further checks to prove your identity. As this is often a manual check, if youre applying for credit your application could be delayed.
Having a marker under this section wont automatically mean your application will be rejected. Its there to protect you from being a victim of fraud.
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Other Accounts Included In A Credit Report
Your mobile phone and internet provider may report your accounts to your credit bureau. They can appear in your credit report, even though they arent credit accounts.
Your mortgage information and your mortgage payment history may also appear in your credit report. The credit bureaus decides if they use this information when they determine your credit score
A home equity line of credit that is added to your mortgage may be treated as part of your mortgage in your credit report. If your HELOC is a separate account from your mortgage, it is reported separately.
Apply For A Store Charge Card
If you shop in-store, itâs common to be asked to sign up for a store card when you pay for your purchase. While these cards generally have higher interest rates and very low credit limits, they can be an ideal tool for building credit. Approval rates are generally higher, and these cards can sometimes come with extra perks, such as a percentage off your initial purchase or special in-store coupons.
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What Factors Contribute To The Fico Credit Score
Most credit rating companies use five main factors to build their credit score, each having a different level of impact. Here are the factors and their weights for the FICO Classic Credit Score®:
Payment history .
What it looks at: Especially within the past two years, but up to the past seven years, how often do you meet your credit payments on time and in full?
What it means: If lenders see a strong history of positive payments, they are more likely to see you as a trustworthy borrower.
Amounts owed .
What it looks at: What is your credit utilization rate? Divide the total amount of credit you have been given by the total amount you currently owe.
What it means: When your credit utilization rate is less than 30%, you are seen as a responsible manager of credit.
Length of credit history .
What it looks at: What’s the average age of your credit lines?
What it means: When lenders see a long average age, they can be confident that you have strong relationships with your creditors.
What it looks at: How many different lines of credit are currently open in your name?
What it means: When lenders see a diverse mix of credit, they can feel confident that you are good at managing your credit lines.
New credit .
What it looks at: How often are credit checks made for your credit score to open new lines of credit?
What it means: When lenders see many new credit inquiries, they assign a higher level of risk to the borrower.
Why Are My Credit Scores Different
There are a few reasons why you might get different credit scores from FICO and each of the three major credit-reporting agencies. Here are some of the most common situations:
We recommend you periodically check your credit reports for errors, which could affect your scores. You can check your Equifax® and TransUnion® credit reports for free on Credit Karma, and your Experian® report on www.AnnualCreditReport.com.
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What Is A Good Credit Score Range
Good credit score = 680 739: Credit scores around 700 are considered the threshold to good credit. Lenders are comfortable with this FICO score range, and the decision to extend credit is much easier. Borrowers in this range will almost always be approved for a loan and will be offered lower interest rates. If you have a 680 credit score and its moving up, youre definitely on the right track.
According to FICO, the median credit score in the U.S. is in this range, at 723. Borrowers with this good credit score are only delinquent 5% of the time.