Washington Homeownership Center: Understanding Your Credit Report

It is important to have an understanding of your credit report and credit score before applying for a mortgage. Your credit score, referred to as FICO by lenders, is one of the most important factors on your ability to qualify for the best loan products available. Your score is determined by the information on your credit report. Your credit report tracks: what types of credit you use, length of time your accounts have been open and whether you have paid your bills on time. Knowing the information on your credit report will help you know what type of loan you can qualify for and reduce your chances of being taken advantage of by predatory lenders.

To receive a copy of your report, contact each of the credit bureaus below. There is a fee between ($8-$15) for each report or approximately $40 for all three. However, if you have been denied credit, insurance, or employment within the past 60 days, you may request a report for free. There are several non-profit agencies that can assist you with analyzing your report and helping you re-build your credit if necessary.

The following are the three major credit-reporting companies. You can request your credit report by mail, phone or online.

Experian
PO Box 2104
Allen, TX 75013-2104
30374-0421
1.888.397.3742
www.experian.com

Trans Union corp.
Consumer Disclosure Center
PO Box 390
Springfield, PA 19064-0390
1.800.888.4213
www.transunion.com

Equifax
PO Box 740241
Atlanta,GA
1.800.997.2493
www.equifax.com

NOTE: Requests made by mail should include your first, middle and last name (including Jr., Sr., III), current address, previous addresses in the past five years, social security number, date of birth, current employer, phone number, signature and applicable fee.

If there are errors or negative information on your credit report:

Contact the appropriate creditor or lender before contacting a credit-reporting agency. Most large creditors have standard procedures for customers to dispute items on their account. If you have proof that the item in question is incorrect, it should be resolved quickly and taken off of your credit report.

If necessary, contact each credit bureau with a letter detailing the error on your report. You will need a credit report to do this, which may be free by contacting the credit-reporting agency. Your credit report will provide you with information on how to dispute errors. You will want to identify each incorrect item on your report, explain why it is wrong, and ask that it be deleted or corrected. If the credit-reporting agency is unable to verify incorrect information on your report within 30 days, they are required to remove it.

If the credit-reporting agency does not remove it, you are allowed to add a 100-word statement of the situation to your report. You may ask the agency to submit your dispute statement to any person or business that has requested a report within the last six months. If you do this within 30 days of receiving notice of your denial of credit, there is no charge.

Negative information may be kept on your report for up to seven years and up to ten years if the information is in regards to bankruptcies. You must ask credit-reporting companies to remove negative items that are at least seven years old. This information is not automatically removed. If an item remains it may negatively impact your credit score.

What can you do if you have a negative credit history?

If you have a negative credit history, no one can unconditionally guarantee to clean up your records. Credit repair fraud is a constant problem for consumers. Under the Fair Credit Reporting Act, credit repair companies cannot do anything that you cannot do for yourself at little or no cost. Although errors on your credit report can be corrected, a poor credit history cannot be erased. But don't give up hope... over time, with a little diligence, it can often be improved significantly.

Predatory lending

If you have negative credit history, you are at risk for predatory lenders. Refer to the Predatory Lending section on this website to find out what you need to know to avoid them.

Tips for improving your credit score:

This site has comprehensive information about credit. Go to Credit education to learn more about improving your credit score, disputing errors on your report and how your credit affects your ability to qualify for loans.

The Northwest Justice Project is a non-profit legal organization. Their site has information on your rights as a consumer, bankruptcy, and credit. Go to Consumer / Debt section on their site.

Non-profit agencies can assist with credit counseling, developing a budget, defining financial goals and tracking your expenses and re-building your credit.