CREDIT REPORT : Getting Your Credit Together
CREDIT REPORT, Credit is the single most important risk element when applying for a mortgage.
Information about you and your payment histories is evaluated and logged each and every time you make a credit purchase, apply for credit, or even make a payment.
Knowing how credit can both help and harm you when lenders look at your loan application is key.
WHAT EXACTLY IS CREDIT?
Credit means I’m going to loan you some money and you’re going to pay me back.
If you pay me back on time, every time, I’ll be happy to lend you more money or make a loan the next time you need it.
There are several definitions of credit, but it really boils down to two terms: “ability” and “willingness.”
Ability means that you can afford the monthly payments.
Willingness means you care about paying the loan back.
Ability means that you make $5,000 per month and you can afford a $200 car payment.
Willingness means you actually make the payments on time, every time they’re due.
HOW WERE CREDIT BUREAUS ESTABLISHED?
In the past, when you wanted to borrow money or open a credit account.
you’d sit in front of a banker or department store manager, apply for the credit, and the bank would contact other places where you might have borrowed money before to see if you paid on time.
If you did, you probably got the loan.
If you didn’t, you probably wouldn’t get the loan, or if you did get the loan, it would be at a higher interest rate.
But this was still a cumbersome process, both for the prospective lender and the borrower.
So credit repositories were invented.
Vendors and banks consent to store shoppers’ credit designs in a focal spot.
And that different traders and banks can get to.
Instead of taking a loan application and literally writing to or calling all the listed credit references.
lenders now just enter the person’s name and Social Security number and pull all the credit information listed in the record bank.
Quicker loan decisions mean more loans can be made.
Merchants contribute to these mutually beneficial entities as reporting members of the repository.
Other repositories emerged, with the three major ones being Equifax, Experian, and TransUnion.
WHAT’S IN MY CREDIT REPORT?
It contains a list of companies where you applied for credit, what your credit limits are, and if you’ve paid on time.And more.
There’s also quite a bit of personal information.
It contains not only your full name, but also any other name or nickname you might have used to apply for credit.
One creditor might have you listed as John Public while another creditor has you as John Quincy Public, or even J. Q. Public.
All the various ways you may have applied for credit will show up here along with your Social Security number.
Are you a Jr. or Sr.? Name variations will appear as well.
Your credit report will also contain where you live now and any previous addresses as listed with creditors, along with your birth date or age and employment information.
WHAT’S NOT IN MY CREDIT REPORT?
The credit report gathers information on who you are and how you pay your bills.
It doesn’t list anything regarding your race or marital status.
If you apply jointly for a mortgage, your marital status might be added to the report but that’s because you applied jointly, as husband and wife.
(Unmarried partners, of course, do not show up together on the same credit report.)