Credit Information - Credit 101

Whenever you are preparing to make a major purchase or financial decision you should make sure that you do a personal check of your credit report and scores a few months before seeking a loan of any kind.

If you have not pulled your credit file recently, it is very important to limit the amount of inquiries you make as it can and will impact your credit scores. This can also impact your interest rate and terms of your loan.

Before moving forward on your own we welcome you to take advantage of one of our knowledgeable mortgage professionals, to assist you in fully understanding your rights and the delicate and sometimes confusing process of understanding your credit profile. Credit bureau files can be hard for the average person with no experience to read, making this process a much more frustrating experience than it needs to be. We would like to see you avoid that frustration with one simple phone call to Commonwealth Mortgage Group. With no cost or obligation to you, we are here to help and look forward to your call or e-mail.

Our goal is to start with education, and we believe you deserve quick and accurate answers to questions regarding your credit. Please feel free to contact one of our mortgage loan originators at 262-691-6100, OR email us at info@commonwealthmg.com

Credit Information - Credit Reports

You can order a credit report from all three credit bureaus - TransUnion, Equifax and Experian at any time. At Commonwealth Mortgage Group we will gladly obtain your credit reports at no cost to you while beginning the pre-approval process.

Consumers may now check their credit reports once per year free in the state of Wisconsin with no "hard inquiry" or impact on your credit file. If after you consult with one of our mortgage professionals you wish to proceed on your own, you can do so by ordering your reports at the following number 1.877.322.8228; or by logging onto the website created by the three credit bureaus: https://www.annualcreditreport.com (Link opens in a new window.)

Commonwealth Mortgage Group offers an educational stress free alternative to working with all three credit bureaus to receive your credit profile. Your mortgage professional will be available to help you read and decipher your credit report and help you in deciding what is your next step in the process whether is mortgage approval or credit repair. Contact us today to get started!

What is a credit file disclosure or a credit report?

A credit file disclosure, commonly called a credit report, provides you with all of the information in your credit file maintained by a consumer reporting company that could be provided by the consumer reporting company in a consumer report about you to a third party, such as a lender. A credit file disclosure also includes a record of everyone who has received a consumer report about you from the consumer reporting company within a certain period of time ("inquiries"). The credit file disclosure includes certain information that is not included in a consumer report about you to a third party, such as the inquiries of companies for pre-approved offers of credit or insurance and account reviews, and any medical account information which is suppressed for third party users of consumer reports. You are entitled to receive a disclosure copy of your credit file from a consumer reporting company under Federal law and the laws of various states.

What is an inquiry?

An inquiry occurs when an entity requests a copy of your credit report. These inquiries can be made by credit-granting organizations, such as banks and retail stores, when you are applying for credit. Other inquiries, from requestors such as insurance companies, potential employers, or rental housing agencies, can be made after you have given the requestor your consent. The entity's name will appear on your credit report, allowing you to monitor who accessed your credit history.

How can I exclude my name from nationwide consumer credit reporting company lists for unsolicited credit and insurance offers?

You may request that consumer credit reporting companies exclude your name from lists for pre-approved, unsolicited credit and insurance offers. To find out more, please call 1–888–5OPTOUT (1–888–567–8688).

Credit Information - Credit Scores

A credit score is a complex mathematical model that evaluates many types of information in a credit file.

What is a credit score used for?

A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service –– specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.

How does my credit score affect me?

Your credit score is an important indicator of your financial health. Lenders use your credit score to determine: Whether or not you are a good candidate for a loan, what type of loan you qualify for and what interest rate interest rate you will receive. While your credit score is a key determinant of your creditworthiness, lenders also examine the information on your credit report and your loan application. Regularly checking your credit report enables you to: Be informed of the most up-to-date information in your credit history and to correct any inaccuracies, to make sure that your credit data is a true depiction of your credit record and increasing your chances of receiving credit under the best possible terms

What factors influence my credit score?

Various factors determine your credit score, including the following:

  • Payment history – A good record of on-time payments will help boost your credit score.
  • Outstanding debt – Balances above 50 percent of your credit limits will harm your credit. Aim for balances under 30 percent.
  • Credit account history – An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.
  • Recent inquiries – When a lender or business checks your credit, it causes a hard inquiry and a slight ding to your credit score.
  • Apply for new credit in moderation.
  • Types of credit – A healthy credit profile has a balanced mix of credit accounts and loans.

How do I improve my credit score?

These common guidelines and practices will generally help raise your credit score:

  • Be Punctual - Pay all of your bills on time. Lateness, collections, and bankruptcies have the greatest negative impact on your credit score.
  • Check your credit report regularly and take the necessary steps to dispute inaccuracies. Don't let your credit health suffer due to inaccurate information.
  • Watch your debt. Keep your account balances below 50% of your available credit. For instance, if you have a credit card with a $1,000 limit, you should try to keep the balance owed below $500.
  • Avoid "quick" credit fixes. A good credit score is created over time and reflects a number of interrelated factors.
  • Avoid excessive inquiries. A large number of inquiries occurred over a short period of time may be interpreted as a sign that you are:
    • Opening numerous credit accounts due to financial difficulties.
    • Overextending yourself by taking on more debt than you can actually repay.

What can I do to start improving my credit scores?

Start by contacting Commonwealth Mortgage Group. We will consult with you on how to properly and strategically raise your scores as quickly as possible. If your credit score is a little low, you should pay your bills on time, reduce your debt, remove inaccuracies and avoid new inquiries to give it a boost. Many people who take good credit for granted underestimate the amount of savings that can be realized from a good credit rating. The cost of checking your credit is minimal compared to the amount you may save from what you learn.

Credit Information - Credit Fraud

Credit fraud is a growing problem, and it affects each and every one of us.

Why should I be concerned about credit fraud?

When a credit card thief purchases goods with a stolen card, it is the creditor that has to cover that cost. Creditors cover this loss by charging cardholders higher interest rates. Credit card fraud goes beyond the use of a stolen credit card. A thief can use your account numbers even when your credit cards are safely in your wallet. You may not realize that fraudulent charges are being racked up on your card until you notice charges, that you did not make, on your monthly statement.

How do I deal with credit fraud?

If fraud is suspected, you should contact the credit bureaus immediately. The bureaus have an established process that will help identify and stop fraudulent activities. In the case of fraud detection, you must inform your creditors and request that they immediately halt all incoming transactions.

Where can I find out more about identity theft?

Please visit the Federal Trade Commission Identity Theft Center at www.ftc.gov

Credit Information - Credit Repair

If inaccurate information appears on your credit report, you have the right under the Fair Credit Reporting Act (FCRA) to dispute the information.

Where can I find information on disputing or correcting information in my credit file?

You should begin the dispute process by contacting the creditor responsible for the inaccuracy. You can find the contact information for each of your creditors at the end of your credit report. You can also contact Commonwealth Mortgage Group to discuss the inaccuracy. Because Commonwealth Mortgage Group is not a credit bureau, we cannot correct the inaccuracy for you; however, we are happy to discuss your credit report and answer any questions you may have. To dispute inaccurate information directly with the credit bureaus, you must explain the inaccuracies in writing. Include copies of documents that support your position. You can also include a copy of your credit report, and mark the items in question.

In your letter, be sure to include:

  • Your full name
  • Your complete mailing address
  • Your date of birth
  • Your Social Security Number
  • The name and account number of the creditor and item in question
  • The reason for your disagreement with the disputed item; be specific
  • Your signature

Special Tip: Send your letter via certified mail and save the receipt. Save copies of your dispute letter and all enclosures. This information should be filed away to document your communication with your creditors and the credit bureaus.

Please note: This letter doesn't guarantee that the changes will be made on your credit report; it just insures that they will reinvestigate your credit report. If changes are made, you will be contacted by the credit bureaus within 30 days.

Send your letter to the three national credit bureaus.

Where can I find out more about credit repair?

Please visit the Federal Trade Commission Credit Repair information at:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm

Credit Information - Credit Bureaus

Your credit history includes information concerning your identity, your payment habits, and your public record.

What is a credit bureau?

A credit bureau, or credit repository, is an entity that gathers information about consumers' credit histories. Credit bureaus sell credit reports to credit grantors, such as banks, finance companies, and retailers. Credit grantors use credit reports to determine whether or not a potential borrower is creditworthy. There are three major credit bureaus in the United States: Experian, Equifax, and Trans Union. These three bureaus provide nationwide coverage of consumer credit information.

How do the credit bureaus obtain information?

Credit bureaus obtain identification and credit information from credit grantors, such as banks, retailers, and collection agencies. Bureaus obtain monetary-related public record information directly from the court systems.

How long do the credit bureaus keep my credit information?

The credit bureaus keep your personal credit history for a period of approximately ten years.

  • Closed or Inactive Accounts - 10 years from the date of last activity.
  • Derogatory Accounts - 7 years from the date of original delinquency.
  • Public Records - 7 years from the date of payment or indefinitely if the Public Record is an unpaid tax lien.
  • Chapter 7 Bankruptcies - 10 years from date filed.

The top 3 credit bureaus:

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