1. How do I get a copy of my credit report?
Get a free copy of your credit report at AnnualCreditReport.com. You can receive a free credit report from each nationwide credit reporting company once every 12 months.
You can also order your free credit report:
No matter which method you choose, you have the option to request reports from the nationwide credit reporting companies all at once or one report at a time. By requesting the reports at the same time, you can determine whether any of your files have errors. By requesting the reports separately, you can monitor your credit files more frequently throughout the year.
Your free credit report does not include a credit score. You can purchase a score directly from the credit reporting agencies and scoring companies. However, it’s important to check your credit report to make sure the information is accurate because your credit score is based on the information in your credit report. It’s also important to note that the score you purchase may not be the same as the one lenders use to decide whether to give credit.
2. What information goes into my credit score?
Some factors that make up a typical credit score include your bill-paying history, the number and type of accounts you have, and how much of your available credit you are using. Here are some of the other common factors that make up a typical credit score:
There is no "one" credit score. There are many credit scoring formulas available to you as a consumer as well as to lenders, and the score will also depend on the data used to calculate it. For the most common credit scores, the information that goes into your score comes from your file at the credit reporting companies. This is why it is so important to review these files to ensure they are accurate.
By law, the calculation of your credit score can’t use or take into account factors such as:
3. How does my credit score affect my ability to get a mortgage loan?
Your credit score, as well as the information on your credit report, are key ingredients in determining whether you’ll be able to get a mortgage, and the rate you’ll pay.
Your credit report and your credit score are two different things. Your credit score is calculated based on the information in your credit report. Higher scores reflect a better credit history and make you eligible for lower interest rates.
You have many different credit scores, and there are many ways to get a credit score. However, most mortgage lenders use FICO scores. Your score can differ depending on which credit reporting agency is used. Most mortgage lenders look at scores from all three major credit reporting agencies – Equifax, Experian, and TransUnion – and use the middle score for deciding what rate to offer you.
Errors on your credit report can reduce your score artificially – which could mean a higher interest rate and less money in your pocket – so it is important to check your credit report and correct any errors well before you apply for a loan.
Your credit score is only one component of your mortgage lender’s decision, but it’s an important one.
Other factors include:
4. When should I review my credit report?
You should check your credit reports at least once a year to make sure there are no errors that could keep you from getting credit or best available terms on a loan. Be sure the information in the report is accurate and up-to-date. You should also check your report:
5. What is a FICO score?
A FICO® score is a particular brand of credit score. A credit score is a number that is used to predict how likely you are to pay back a loan on time. Credit scores are used by companies to make decisions such as whether to offer you a mortgage or a credit card. They are also used to determine the interest rate you receive on a loan or credit card, and the credit limit.
FICO stands for the Fair Isaac Corporation. FICO was a pioneer in developing a method for calculating credit scores based on information collected by credit reporting agencies. Today, other companies also have credit scoring formulas (“models”), but most lenders still use FICO scores when deciding whether to offer you a loan or credit card, and in setting the rate and terms. Banks may also use FICO scores when approving checking and savings account applications and setting the terms of those accounts.
Just like there is no single credit score – there are several companies that create scores – there is also no single FICO score. Like all credit scores, FICO scores depend on the contents of your credit report. There are three major agencies that collect credit data -- Experian, Equifax, and TransUnion. Because the credit reporting data at each agency can be different, your FICO scores may be different depending on which agency’s data is used to calculate it. FICO also has different variations of its basic scoring model tailored to different types of lenders (for example, home loans or car loans). So you could have several different FICO scores, even when they are all calculated from the same credit agency’s data.
You cannot buy these customized kinds of FICO scores, but myfico.com does make available a score calculated with a general FICO model. Several other companies also provide “educational” scores that might give you some sense of what your scores might look like. Your educational score can be different from the score a lender would use, and the differences can sometimes be significant. The CFPB published a report on these differences.
FICO scores range from 300-850. Usually a higher score makes it easier to qualify for a loan and may result in a better interest rate. Like all credit scores, FICO scores can change over time according to your credit behavior
6. What's a credit inquiry?
An inquiry refers to a request to look at your credit file, and it generally falls into one of two types:
Hard inquiries. These are typically inquiries by lenders after you apply for credit. These inquiries will impact your credit score because most credit scoring models look at how recently and how frequently you apply for credit.
Soft inquiries. These are reviews of your credit file, including reviews of existing accounts by lenders, prescreening inquiries by prospective lenders, and your requests for your annual credit report. These will not change your credit score.
7. Why do I receive so many offers for new credit cards in the mail?
Credit card issuers, auto finance companies, other lenders, and insurers ask credit bureaus for lists of names and addresses of individuals who meet certain criteria (such as a minimum credit score). They then use this information to contact you. You can opt out of receiving these offers.
