If you need a loan, you’ll need to know about credit scores such as how they’re determined, what impacts the number, and how to fix it if there’s an issue.
Sometimes, a person’s credit report will contain errors. In fact, about 70% of credit reports have some sort of error. When you apply for a home loan, one of the things they do is pull your credit report, and if there’s an issue with your credit score, the agent will oftentimes go through the report with you to determine if there are any errors. But you don’t have to get a home loan to do this. You can order your own credit report through annualcreditreport.com once every year for free. It pulls information from the three credit bureaus: Transunion, Experian, and Equifax. If you do find an error, you will have to dispute the error with all three bureaus and it could take 40-50 days to clear up the issue.
The reason it’s important to clear up credit errors is that it is part of what comprises your credit score. A credit score is a numerical representation of how likely you are to repay your loan. It relies on factors such as your debt-to-income ratio, any judgments or bankruptcies, even the number of late or missed payments. In fact, every late payment will lower your score by 40-60 points! Your credit score is what affects your pre-qualifying loan. It determines your interest rates and even if you can qualify to buy a home.
Today, Deborah is joined by Ryan Herbig of American Liberty Mortgage to discuss credit reports and what you can do to increase or repair your credit score so you can make your dream of owning a home a reality.