Your FICO Score
You have a dream to by real estate on
Martha's Vineyard, but you cannot pay for it 100% with cash,
and will need a mortgage loan. You sit down with a lending
agent at one of our local banks figure out exactly how much
of a loan you qualify for. Your credit history may be the
deciding factor in whether or not you get a loan, and the
way a lender evaluates you is through your credit score.
and TransUnion www.transunion.com
are three of the major credit reporting agencies. Each uses
a slightly different system to arrive at a score. However,
the best known is called the FICO score, based on a model
developed by Fair Isaac and Company and used by Experian.
Equifax bases its score on a system called BEACON. TransUnion
uses a system called EMPIRICA.
|Each system considers
a range of data available in your credit report:
||How many years have you been issued
||Do you pay your bills on time?
|Credit Card Balances
||Do you carry high balances and
on how many accounts?
||How many times have you applied
for credit, had your credit checked and declined?
Each of these items as well as other items
are factored in and are assigned a value weight. The results
are added up and condensed into a rating number. FICO scores
range from 300 to 800 --- the higher the number the better
the score. Most home buyers should find their scores falling
between 600 and 800. The higher the FICO score the better
the credit risk; therefore, the more likely the buyer may
qualify for a better mortgage rate.
There is not much you can do to change your FICO score because
your credit history is just that, the history of your credit
throughout your lifetime. However, credit history reports
are not always accurate so it is every consumer's responsibility
to check the data for accuracy. Go to www.myFICO.com to get
your credit score and/or your credit report from all three
credit reporting agencies. By the end of December 2005, credit
reporting agencies in all states will allow consumers, even
though they have not been declined credit, to receive one
copy of their credit report per year free of charge. Massachusetts
already mandates this service. Here is an excellent website
that addresses consumer credit concerns: http://www.yourcreditcounts.com.
In the event that you discover outdated or incorrect information
on your credit report. Since these errors can have a negative
effect upon your chances of getting a mortgage or any other
form of credit, here is what you can do if you find an error.
Contact the creditor or lender regarding the problem. Most
large creditors have standard procedures for handling customer
disputes. If you have proof that the item in question is incorrect,
it should be resolved quickly. This is why it is paramount
that you keep good records of everything you do. Take the
names of customer service people you speak with and document
the date and time of all conversations. Send all correspondence
return receipt requested, and make copies of any letters or
documents you send. Always follow up your phone calls with
a letter. List each disputed item, and state how it is inaccurate,
attaching copies of all relevant documents. Include your full
name, account number, the dollar amount in question, and the
reason you believe the item is wrong. Never send original
If the creditor finds that the disputed information is indeed
incorrect, the creditor is required under the
Fair Credit Reporting Act (amended May 22, 2009) to update its records, usually
within 30 days, both internally and with the credit reporting
agencies it deals with.
If you cannot reconcile the error with the lender, then you
should contact the credit-reporting agency that is reporting
the item in question. You will need to send them written documentation
of the inaccuracy. The credit-reporting agency will review
the disputed information and if further investigation is required,
they will provide notification of your dispute, including
the relevant information you submitted, to the lender that
furnished the disputed credit information to them. Then the
lender will review the information, conduct their own investigation,
and report back to the credit-reporting agency. The credit-reporting
agency will then make all appropriate changes to your credit
file based on the investigation, and notify you that the correction
has been made.
Just because you have corrected an inaccuracy with one credit-reporting
agency does not mean it will be corrected promptly or automatically
with the other credit-reporting agencies. Therefore, you may
want to get your credit report from the other two agencies
to see if their reports contain the same error. If the error
exists on their reports it is best to contact each of the
three agencies yourself:
Trans Union: 800-916-8800
The credit reporting agency should notify you within about
30 days of your inquiry as to the results of their investigation
and provide you with a revised credit report free of charge.
Examine it carefully to ensure that the inaccuracies have
been fixed or removed.
If the error has been fixed, you can ask the credit reporting
agency send the revised report to anyone who received the
inaccurate report in the past six months (two years in the
case of employers).
If, on the other hand, you cannot resolve the item in dispute,
you have the right to attach a 100-word statement to your
credit report explaining the nature of your disagreement.
Your statement will become part of your credit file, and will
be included each time someone accesses your credit file. There
is no charge for inserting the explanation addendum to your