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Frequently Asked Questions (FAQs) on mortgages: Real Estate
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How do I get a copy of my credit report?
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What should I look for in my credit report?
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Why is my FICO score so important in getting a mortgage?
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How do I establish credit to qualify for a mortgage?
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How do I get a copy of my credit report?
If you have been denied credit in the past 30 days, you have the
right to request a free copy of your credit report. Beginning
December 1, 2004 in the Western states, and nationwide in 2005, the
three main credit reporting bureaus, Equifax, Experian and TransUnion
will be required to give you, upon request, a free copy of your
credit report once every 12 months. Once set up in your area, you
will be able to obtain your free copy by calling (877) 322-8228, or
on the internet at
www.annualcreditport.com. If you prefer, you can write to Annual
Credit Report Request Service, P.O. Box 105281, Atlanta, Georgia
30348-5281. You are assured of your free credit report by the Federal
Trade Commission's ruling last year under the Fair Credit Reporting
Act.To contact the credit bureaus individually:
- Experian
P.O. Box 2106
Dallas, TX 75002-9506
(888) 397-3742
www.experian.com
- Equifax Information Services, LLC
P.O. Box 740241
Atlanta, Georgia 30374
(800) 685-1111
www.equifax.com
- TransUnion, LLC
Consumer Disclosure Center
P.O. Box 2000
Chester, PA 19022
(800) 916-8800
www.transunion.com
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What should I look for in my credit
report?
Once you have obtained a copy of your credit report from the three
main credit reporting bureaus, look for potential problem areas which
could impact your over all credit score. Look carefully for
inaccurate information, such as late payments which may be reported
which are not correct. It is not uncommon for a creditor to show a
delinquent credit card payment, for example, when you are know you
have paid your bill on time. You should also check the public records
section of your report which will show any tax liens, bankruptcies or
default judgments which have been levied against you. Check the
credit card accounts listed in the report carefully to be sure there
are not any accounts which don't belong to you. If you find errors,
you will want to report them as soon as possible. You can learn more
about disputing incorrect information at
www.ftc.gov/credit.
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Why is my FICO score so important in getting a mortgage?
Most lenders rely on a credit score, called a "FICO score" to
determine a Borrower's credit worthiness when applying for a
mortgage. Your FICO score or number may determine what type of
interest rate and loan program you are likely to be offered from any
one lender. Each lender may have different guidelines and
requirements to fit their individual loan programs. Your FICO score
is comprised of a compilation of your credit history from the three
major credit reporting bureaus,
Equifax,
Transunion,
and Experian.
Since each credit bureau may collect your credit data differently, an
average score of the three bureaus is deemed the most accurate.
In
general terms, a score of 720 or better will mean that your credit
risk is very low and you may be offered a preferred low interest rate
and several loan program options. A FICO score in the range of 660 to
719 is still acceptable for several different loan programs. A score
of 620 to 659 indicates a Borrower shows a higher degree of risk to
default on a loan, so different guidelines may apply than for a
Borrower with a higher FICO score. Under 619, a Borrower is generally
considered a high risk for default. A high risk Borrower may still
qualify for a loan, but the interest rate or terms may not be as
favorable as of those offered to a low-risk Borrower. To order a copy
of your FICO score, contact Fair, Isaac Corporation at:
www.myfico.com.
To improve your FICO score, avoid opening new charge accounts,
buying a car or furniture on time or looking on the internet for low
rate credit deals between the time when you receive a loan commitment
and the time you close.
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How do I establish credit to qualify for a mortgage?
If you are a young Borrower, or a new Borrower, with little or
no credit history you can establish credit by working for two years,
paying off something small, like a student loan each month, and get
one credit card and pay it off each month.
Another way is to get a Secured Credit Card. If you're new to the
world of credit or want to start building a good credit history or if
you've had credit problems in the past, the Secured Credit Card can
put you on the road to rebuilding your credit history.
A secured card looks and acts the same as any credit card and
provides you with the same features, conveniences, and flexibility.
Even if you have been turned down before, you can enjoy the benefits
and security of carrying a Visa or MasterCard credit card for:
Shopping, Car Rentals, Identification, Airline Tickets, Emergencies,
Cash Advances, Lodging Reservations, and so much more. You can use it
to pay in situations where cash or checks aren't accepted, like
renting a car, making reservations, or buying plane tickets over the
phone.
To get a Secured Credit Card, you'll need to open a savings or CD
account in your name and deposit an amount of money to serve as
security for the card. The money you deposit will earn interest, but
must remain in your account while you are using the card. The amount
of your deposit, credit line, and the fees you pay for the Secured
Credit Card are determined by the financial institution that gives it
to you. Eventually, as you build a good credit history over time,
your card issuer may increase your credit line.
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