CREDIT REPORT BASICS
A tri-merged credit report which includes reporting from EMPIRICIA at
TransUnion, BEACON at Equifax and TRW/Fair, Isaac Model at TRW, the three major
credit reporting agencies in the US, is most often used for all FannieMae/FreddieMac
loans. Each report will have different information as reporting to them is
voluntary and creditors subscribe to whichever agency they want, if any at all.
Credit scores are a way for lenders to quickly evaluate and predict a
potential borrower's creditworthiness. It is not a measure of the borrower's
income, assets, bank accounts, etc… The credit report is basically divided into
1-Identifying information: This involves your social security number, name,
previous names, your spouses name, your previous address, date of birth,
etc…This information is verified for accuracy.
2-Credit history: This shows the name and number of your tradelines. The
name of the creditor, when the account was opened and/or closed, what your
current payments and balances are, what your maximum credit amount is and if
you've paid on time and when and how often you've been late.
3-Public records: Lenders like to see this section completely blank. This is
where public records like arrests, bankruptcies, judgments and tax liens would
4-Inquiries: Anytime anyone orders a report, even you, it will show here.
There are two kinds of inquires. "Hard" inquires are ones you've
signed for and initiated it, as if applying for an auto or real estate loan.
"Soft" inquiries are when companies want to pre-qualify you for their
promotional materials. These "Soft" inquiries will only show-up on
credit reports that you order for yourself. Can all these inquiries effect your
credit score? The vast majority of inquires are completely ignored by the FICO
scoring model. In fact, you have a 30-day buffer period where auto and mortgage
inquires are initially bypassed and not counted. It also counts two or more
"Hard" inquiries in the same 14-day period as just one inquiry.
Credit scoring: A Fair, Isaac Credit Bureau Score, or FICO scoring is a
means of grading potential borrowers based on the likelihood that they'll pay
their credit obligations as agreed. Scores range from 300-900 (depending upon
the depository) and each of the major credit bureaus score independently of
each other based on the FICO scoring system. The higher the score the better
credit risk you are perceived to be and as a result the better terms and
financing you can expect to receive from a lender.
For more about credit reports see the links below:
Credit Reports . . . Understanding
Credit and Divorce
Closing Credit Accounts