March is Credit Education Month, and an important time to consider how your credit can impact real estate purchases, now and in the future.

To give yourself a starting point, first understand what a credit report is and how it impacts you as a borrowed.

According to MyFICO.com, “When a consumer applies for credit – whether for a credit card, an auto loan, or a mortgage – lenders want to know what risk they'd take by loaning money. When lenders order a credit report, they can also buy a credit score that’s based on the information in the report. A credit score helps lenders evaluate a credit report because it is a number that summarizes credit risk, based on a snapshot of a credit report at a particular point in time.”

MyFICO.com also explains, “Your credit report lists what types of credit you use, the length of time your accounts have been open, and whether you've paid your bills on time. It tells lenders how much credit you've used and whether you're seeking new sources of credit. It gives lenders a broader view of your credit history than do other data sources, such as a bank's own customer data. A credit report also includes information on where you live, and whether you’ve been sued or arrested, or have filed for bankruptcy.”

Go here to understand more about your credit report.

Next, check your credit rating. Your credit rating is used by banks and mortgage companies when considering you for a loan.

According to the FDIC, “The amended Fair Credit Reporting Act permits consumers to request a free copy of their credit report once every 12 months from each of the three major credit reporting agencies (i.e., Equifax, Experian, Trans Union).”

The FDIC has compiled all the ways to obtain your free copy of your credit report from each of the three credit reporting agencies.

You can order a free credit report:

  • On the Internet

  • On the phone: call 1-877-322-8228

  • By mail - complete the Annual Credit Report Request Form found here

  • and mail to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

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Do not contact the three nationwide consumer reporting companies individually for credit reports.

If you find mistakes on your credit report, work to correct them. In a February 27, 2014, article, U.S. News and World Report identified the three most common errors seen on a credit report. They cited identity errors, Incorrect account details, and fraudulent accounts. Identity errors can be as simple as your name with the wrong address or more serious where your name and another, sometimes similar name, are confused with each other. Incorrect account details are mistakes made by a bank, lender, store credit card or anywhere you maintain a line of credit. This could be an incorrectly reported late payment or a wrong credit limit. Fraudulent accounts deal with identity theft and are the most serious.

All of these errors should be corrected, either by contacting the lender or creditor or by contacting the credit reporting agency.

Here is how to get in touch with the credit reporting agencies:

Equifax

P.O. Box 740241

Atlanta, GA 30374-0241

1-800-685-1111

 

Experian

P.O. Box 2104

Allen, TX 75013-0949

1-888-EXPERIAN (397-3742)

 

Trans Union

P.O. Box 1000

Chester, PA 19022

1-800-916-8800

 

Oftentimes, resolving a credit report error takes effort and patience, with forms that need to be filled out and returned, phone calls and more phone calls. Your attention to detail can improve your credit score and your credit report.

Your credit is your responsibility and impacts your ability to secure a home loan. Celebrate Credit Awareness Month by looking at your credit this month!

Your Lyons-Sullivan Realty Professionals will work with you from listing your home to selling it and from searching for your next home to buying it. Call us today at (815) 842-1400.