There was a feature story in this morning’s Austin American-Statesman about the fact the what people call “my credit score” can mean different things in different situations and from one potential lender to another:
There are three major credit reporting bureaus — Equifax, Experian, and Transunion. Most mortgage lenders use the “middle FICO” — the one score that’s between the other two — but underwriters rely on many other factors in assessing the risk profile of a loan applicant. Knowing what’s in your credit report, and how the three major credit bureaus rate you, however, is a very important starting point:
Don’t wait until you’re ready to apply for a mortgage to get interested in this. You are entitled to a free credit report each year. There are a number of services where you can get that information. Most will offer the opportunity to subscribe to additional information, but if you want the most hassle-free experience visit the site that is operated by the credit bureaus themselves:
Note that this will show you what is on your credit bureau reports, but it will not give you your bureau credit scores. That’s a little more complicated, and it’s not free, but you can purchase your credit scores from all three bureaus on that same website after you request your free credit report.
Again, start ahead of time — a few months ahead if possible — so that if you see credit issues that you disagree with on your reports you have time to dispute them. There is some great information about that process on the Federal Trade Commission’s website:
As that web page notes, there are companies who will assist you in boosting your credit scores — for a fee. Some are legitimate. Many are not. Please be careful here. Many times I have met a client who wishes to buy a home shortly after they have spent several hundred dollars with one of those companies. In most cases, they would have been better off using that money to pay down outstanding debts or just keeping the cash in the bank. Most good mortgage lenders will offer this advice for free, so get a lender recommendation from your real estate professional and begin that dialogue early.
Credit scores are used for many things these days, from decisions on car loans to mortgage loans, from credit cards to “same as cash” arrangements for furniture and appliances. In some states they are even used in pricing insurance. With information that affects that much of your financial life, don’t wait and get surprised. Take advantage of the many tools that are available.