Apply Now

credit report

• What is considered bad credit?

• What is a credit report?

• What information is on a consumer credit report?

• How long does information stay on a consumer credit report?

• How consumer credit reports are used?

• What do lenders consider before granting you credit?

• What should I do if I believe I have been a victim of credit fraud?

• How does divorce affect consumer credit?

• What is in my credit file that may keep me from obtaining credit?

• What is the Fair Credit Reporting Act?

what is considered bad credit?
Here are some general guidelines you can use to determine whether you may need to speak to a mortgage credit specialist.

Remember that your creditworthiness is not based only on credit scores. You may still qualify for a great deal on a mortgage even if you have paid some debts late. The only way to know for certain is to speak with a professional mortgage credit specialist. We will look at the whole picture not just credit scores.

Back to Top

What is a credit report?
A consumer credit report is a factual record of an individual's credit payment history. Its main purpose is to help a lender quickly and objectively decide whether to grant you credit.

If you have any type of a charge account, car loan, student loan or home mortgage, then information about you is probably stored in a consumer credit database. Most of the information in your consumer credit report comes directly from the companies you do business with, but some information comes from public records.

Back to Top

What information is on a consumer credit report?
The typical consumer credit report includes four types of information:

  1. Personal information: your name, spouse's name, current and previous addresses, Social Security number, year of birth and current and previous employers. This information is gathered from credit applications, so its accuracy depends on filling out the forms completely and consistently each time you apply for credit.
  2. Credit information: specific information about each account such as the credit limit or loan amount, balance, monthly payment and payment pattern during the past several years. This information comes from companies that do business with you.
  3. Public information: federal district bankruptcy records; state and county court records, tax liens and monetary judgments; and, in some states, overdue child support.
  4. Inquiries: the names of those who obtained a copy of your credit report for any reason. This information comes from the credit-reporting agency, and it remains on record for up to two years, consistent with federal law.

Back to Top

How long does information stay on a consumer credit report?
Federal law specifies how long negative information may remain on your credit report. To prevent past errors from haunting you forever, most negative information must be erased after seven years. This includes late payments, accounts that the credit grantor turned over to a collection agency and judgments filed against you in court--even if you later paid the account in full. Credit reporting agencies use the date of original delinquency or, in the case of public records, the date of filing to determine when negative information is deleted. Positive information remains on your report indefinitely.

The length of time a bankruptcy remains on your credit report depends upon which type of bankruptcy you file. Chapters 7, 11 and 12 remain for 10 years. A Chapter 13 bankruptcy (in which you repay part or all of your debts under a court-approved payment plan) remains on your credit report seven years.

Inquiries made on your credit history remain on your credit report between one and two years, depending on the type of inquiry.

Back to Top

How consumer credit reports are used?
Federal law specifies who may obtain a copy of your credit report and how it may be used. Specifically, you may request a copy at any time, but no one else may legally review your report unless they do so in connection with one of the following:

Back to Top

What do lenders consider before granting you credit?
Though all credit grantors are different, in general their decisions boil down to a single issue: If they lend you money, send you a credit card, or give you goods or services, will you pay them back? To help them predict the answer to this question, lenders consider:

These factors fit into three categories, which are known as the "three C's of consumer credit."

Character: Your length of residency and employment give credit grantors an indication of your personal character. They get this information from your credit application. Lenders evaluate your financial character by reviewing your existing credit relationships: credit cards, bank loans, mortgages, etc.
Capacity: Your living expenses, open credit limits, current debts and other payments give lenders a sense of how much debt you can realistically pay given your income.
Collateral / Capital: Whether the loan is secured by a down payment or asset--and how much that down payment or asset is worth --helps lenders determine the terms of the credit or loan they extend to you.

Back to Top

What should I do if I believe I have been a victim of credit fraud? There are several types of credit fraud, many of which involve the illegal use of your credit card numbers, or setting up new accounts in your name. If you suspect ANY improper or illegal activity is taking place, immediately contact each of the credit grantors with whom you have credit.

Back to Top

How does divorce affect consumer credit?
A divorce does not supersede the original contract with the creditor, and does not release you from legal responsibility on any accounts. You must contact each creditor individually and seek their legal binding release of your obligation. Only after that release can your credit history be updated accordingly.

Back to Top

What is in my credit file that may keep me from obtaining credit?
Each credit grantor has established criteria for making credit decisions. Your credit may appear to be perfect, but having too much credit or too many outstanding balances are examples of why your request for credit might be declined. Sometimes the decision is not even based directly on the credit file. For instance, you may not have been at your current residence or in your present job long enough. If you have any questions about why you were not approved for credit, you may want to contact the credit grantor who turned you down and ask them for an explanation.

Back to Top

What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act (FCRA) is the federal law regulating credit reporting companies. This law protects consumers' rights, such as the right to review and contest information in their credit profiles. It also specifically defines who can access the information in a credit profile, and how you are notified of this activity. You may obtain information about the FCRA, including its full text, at http://www.ftc.gov/bcp/conline/edcams/fcra/index.html.

Back to Top