If you are contemplating buying a home, you should first order up an instant credit report so that you can see exactly where you stand with regards to your credit history. Get a 3 in 1 credit report so you can see your credit history as it is reported by the three credit bureaus, TransUnion, Equifax and Experian. The reason you need to get your report from all three bureaus is because the bureaus each compile their own reports and the information can be different.
By ordering your 3 in 1 credit report online you will know almost immediately what your credit history is, and how it affects your all important credit score. Your credit score is basically a summation of the contents of your credit report broken down into a mathematical formula that then yields a three digit number. The range is 350 – 850. As a rule of thumb, a credit score of 720 or higher is considered to be very good and is looked upon quite favorably by creditors.
If your credit score is below the magic 720 level, fear not, there is no need to panic. There are several ways that you can improve your credit score in a relatively short period of time. When we talk about a big ticket debt item like a mortgage, improved interest rates can add up to tens of thousands of dollars in savings over the life of the loan. With that said, you can see why it is so vitally important to know exactly what information your credit report contains.
Be prepared and avoid unpleasant surprises. Order your instant credit report before you apply for a mortgage. You’ll be glad you did. There are 5 key components that make up your credit report. Making improvements in just one of these areas will have a positive affect on your credit score. Generally speaking, these components are:
• Bill paying history – 35 percent of your total score
• Current debt vs. available credit – 30 percent
• Length of your established credit history – 15 percent
• New credit applications – 10 percent
• Current outstanding loans and lines of credit – 10 percent
If you have the discipline, and are dedicated to taking the necessary steps, such as paying your bills on time and reducing your level of debt, you will see your credit score gradually improve. It won’t happen overnight, but you will see your credit score start to rise in a few months. That is the advantage of having an instant credit report. It allows you to see exactly where you stand as far as credit-worthiness goes.
Having the opportunity to see your credit report also allows you to check for errors and inaccurate information. Locating and fixing reporting errors can have a profound affect on your credit score so you most definitely want to file a dispute claim, if and when errant information is discovered. The payoff is a better credit score, which translates into better mortgage rates.