Before Getting a Loan: Credit Report

Most people don't think about checking their credit report until they are on the verge of a large loan for a home or car. That's usually too late to correct any existing problems. Before your next loan, take the time to prepare by understanding what your credit report does and how improving your credit can help your next mortgage. Your credit report is what lenders use to approve or deny your dream, so it's essential to stay on top of it. Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by "credit reporting agencies" (CRAs). One type of credit reporting agency is commonly known as a credit bureau. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy. Before you request a loan, you may want to take a few moments to get your credit report and credit score. The Fair Credit Reporting Act (FCRA) is designed to help ensure that credit reporting agencies furnish correct and complete information to businesses to use when evaluating your application. Your rights under the Fair Credit Reporting Act:

• You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
• You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes. Any company that denies your application must supply the name and address of the credit reporting agency they contacted, provided the denial was based on information given by the credit reporting agency.
• You have the right to a free copy of your credit report when your application is denied because of information supplied by the credit reporting agency. Your request must be made within 60 days of receiving your denial notice.
• If you contest the completeness or accuracy of information in your report, you should file a dispute with the credit reporting agency and with the company that furnished the information to the credit reporting agency. Both the credit reporting agency and the furnisher of information are legally obligated to investigate your dispute.

You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.