{"id":1252,"date":"2022-04-07T14:24:46","date_gmt":"2022-04-07T14:24:46","guid":{"rendered":"https:\/\/ggmortgage.com\/?page_id=1252"},"modified":"2022-04-20T12:41:08","modified_gmt":"2022-04-20T12:41:08","slug":"credit","status":"publish","type":"page","link":"https:\/\/ggmortgage.com\/mortgage-basics\/credit\/","title":{"rendered":"Credit"},"content":{"rendered":"

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MORTGAGE BASICS<\/h3>\n

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Credit<\/h2>\n

Credit history is a recorded file of past and current credit that is utilized to compile a credit score. Read about credit, how it works, how to improve your score and more by clicking learn more below.<\/span><\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.16.1″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16.1″ _module_preset=”default” global_colors_info=”{}”][et_pb_toggle title=”What Is A Credit Report” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by “consumer reporting agencies” (CRAs). One type of CRA is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.<\/span><\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”Do I Have A Right To Know What’s In My Report” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Yes, if you ask for it. The CRA must tell you everything in your report, including medical information, and in most cases, the sources of the information. The CRA also must give you a list of everyone who has requested your report within the past year-two years for employment related requests.<\/span><\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”What Type Of Information Do Credit Bureaus Collect and Sell” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Credit bureaus collect and sell four basic types of information:<\/p>\n

Identification and employment information<\/strong>
Your name, birth date, Social Security number, employer, and spouse’s name are routinely noted. The CRA also may provide information about your employment history, home ownership, income, and previous address, if a creditor requests this type of information.<\/p>\n

Payment history<\/strong>
Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as referral of an overdue account to a collection agency, may also be noted.<\/p>\n

Inquiries<\/strong>
CRAs must maintain a record of all creditors who have asked for your credit history within the past year, and a record of those persons or businesses requesting your credit history for employment purposes for the past two years.<\/p>\n

Public record information<\/strong>
Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.<\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”What Is Credit Scoring” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Credit scoring is a system creditors use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.<\/p>\n

The most widely use credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. Your score will fall between 350 (high risk) and 850 (low risk).<\/p>\n

Because your credit report is an important part of many credit scoring systems, it is very important to make sure it’s accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies:<\/p>\n

Equifax: (800) 685-1111
Experian (formerly TRW): (888) EXPERIAN (397-3742)
Trans Union: (800) 916-8800
These agencies may charge you up to $9.00 for your credit report.<\/p>\n

You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies \u2013 Equifax, Experian and TransUnion. This free credit report may not contain your credit score and can be requested through the following website: https:\/\/www.annualcreditreport.com<\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”Why Is Credit Scoring Used” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on criteria that are not systematically tested and can vary when applied by different individuals.<\/span><\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”How Is A Credit Scoring Model Developed” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

To develop a model, a creditor selects a random sample of its customers, or a sample of similar customers if their sample is not large enough, and analyzes it statistically to identify characteristics that relate to creditworthiness. Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good credit risk. Each creditor may use its own credit scoring model, different scoring models for different types of credit, or a generic model developed by a credit scoring company.<\/p>\n

Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like — race, sex, marital status, national origin, or religion — as factors. However, creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age must give equal treatment to elderly applicants.<\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”How Reliable Is The Credit Scoring System” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

Credit scoring systems enable creditors to evaluate millions of applicants consistently and impartially on many different characteristics. But to be statistically valid, credit scoring systems must be based on a big enough sample. Remember that these systems generally vary from creditor to creditor.<\/p>\n

Although you may think such a system is arbitrary or impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed. And many creditors design their systems so that in marginal cases, applicants whose scores are not high enough to pass easily or are low enough to fail absolutely are referred to a credit manager who decides whether the company or lender will extend credit. This may allow for discussion and negotiation between the credit manager and the consumer.<\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”What Happens If You Are Denied Credit Or Don’t Get The Terms You Want?” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a credit scoring system was used. If so, ask what characteristics or factors were used in that system, and the best ways to improve your application. If you get credit, ask the creditor whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information.<\/p>\n

If you are denied credit, the Equal Credit Opportunity Act requires that the creditor give you a notice that tells you the specific reasons your application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific. Acceptable reasons include: “Your income was low” or “You haven’t been employed long enough.” Unacceptable reasons include: “You didn’t meet our minimum standards” or “You didn’t receive enough points on our credit scoring system.”<\/p>\n

If a creditor says you were denied credit because you are too near your credit limits on your charge cards or you have too many credit card accounts, you may want to reapply after paying down your balances or closing some accounts. Credit scoring systems consider updated information and change over time.<\/p>\n

Sometimes you can be denied credit because of information from a credit report. If so, the Fair Credit Reporting Act requires the creditor to give you the name, address and phone number of the credit reporting agency that supplied the information. You should contact that agency to find out what your report said. This information is free if you request it within 60 days of being turned down for credit. The credit reporting agency can tell you what’s in your report, but only the creditor can tell you why your application was denied.<\/p>\n

[\/et_pb_toggle][et_pb_toggle title=”Fair Credit Reporting Act” open_toggle_text_color=”#FFFFFF” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_text_color=”#FFFFFF” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#FFFFFF” toggle_icon=”||fa||900″ open_icon_color=”#FFFFFF” open_toggle_icon=”||fa||900″ _builder_version=”4.16.1″ _module_preset=”default” title_text_color=”#FFFFFF” title_font=”|700|||||||” title_font_size=”18px” closed_title_font=”|700|||||||” closed_title_font_size=”18px” body_text_color=”#000000″ border_width_all=”0px” global_colors_info=”{}” custom_css_toggle_title=”background-color: #2A2A6A”]<\/p>\n

The Fair Credit Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.<\/p>\n

Your rights under the Fair Credit Reporting Act:<\/p>\n