What a Credit Report Is
But let’s back up a bit. What exactly is a credit report? In short, it is a summation of your credit history (generally from the past seven years), with details about who has lent you money (student loans, credit cards, or store cards, for example), how much they lent you (the actual “credit” they extended you), and how successful you’ve been in paying them back over time. All of this information is on the credit report, and all of it is used to generate a credit score which helps determine your credit worthiness to anyone else who is thinking about lending you money. Credit worthiness is extremely important, because the better your credit history is, the less you will be charged to borrow money (mainly, the interest rate on your loan). Having a better credit score can save you hundreds of dollars monthly on your house payment, and tens of thousands of dollars over the course of a standard 30-year mortgage.
How to Get One
So, now that you know what a credit report is, how do you go about checking it? Well, the name “credit report” is a bit of a misnomer, since in reality you have not one, but three credit reports. This is because your credit history is tracked by at least three different national credit bureaus, primarily TransUnion, Experian, and Equifax. It used to be that you had to contact each of these credit bureaus individually to check your credit report, which could be cumbersome and expensive. Luckily for you, in 2001 the federal government mandated that these three bureaus would have to provide anyone with a credit history a free copy of their credit report once every 12 months.
You can take advantage of this federal mandate at the website setup by the major credit bureaus, AnnualCreditReport.com. The site serves as a portal to the three bureaus, and allows you to check your report with each. Beware of other online sites that appear to offer free credit reports, but ask for a credit card in order to view it; most of these sites use the lure of a free credit report to get you to (sometimes unknowingly) sign up for monthly “credit monitoring” or “credit alert” services, which are then billed to your credit card.
Note, too, that the free credit reports from AnnualCreditReport.com do not include your FICO score. If you want to check your actual FICO score (which we discuss in detail below), you’ll have to pay extra to obtain it from one of the credit bureaus, or from myFICO.com.
You can also easily obtain a free credit report by visiting one of the experienced New Home Consultants here at LGI Homes. You can find more information about our Credit Counsel Program.
Once you’ve obtained credit reports from each of the reporting agencies, you will need to carefully review the information in each report, looking for errors or omissions. Check everything carefully, from the names of the lending institutions, to your payment history, all the way down to alternate names and addresses appended to your file. You’re looking for errors (the report shows that you had an overdue payment when you didn’t), omissions (perhaps a credit card you have is not on the report) or things that are just plain wrong (like having someone else’s account on your report)!
If you find any of the above on your report, you’ll want to begin a dispute process with the bureau that has the faulty information. (Note that if the same error appears on all credit reports, you may have to dispute with each bureau individually). Often the dispute can address the problem, but sometimes you may have to contact the original creditor (the people who lent you money or issued you a card) to clean up your accounts directly with them; if you manage to resolve an issue directly with a creditor, be sure to monitor your credit report, to ensure the faulty information doesn’t reappear. The Federal Trade Commission has more on how to successfully—and properly—dispute credit report items here.
Even if your credit history shows some bumps and bruises, don’t despair. Many people who thought they may not be eligible for home loans have found out to the contrary, and even received favorable terms. Here at LGI Homes, our Credit Counsel Program is designed with people like you in mind. By working with one of our New Home Consultants, we can help you examine your options, and find a home price and mortgage financing plan that can work for you.
You can always contact us, or stop by, seven days a week, to tour one of our exceptional new homes.