Your credit is a crucial piece of the puzzle
Unless you're Bill Gates, you probably will need to borrow money — a lot of it — to buy a home. That means your credit history will come into play in a big way, because that's primarily what lenders will use to decide how big of a risk you are. The prospect of a credit check can bring to mind all sorts of unpleasant things, like whether you paid your credit card bill on time this month — or a year ago this month. Oops.
While you can't undo your credit history, the good news is that you can access it very easily. Your credit history is maintained by three private credit reporting agencies: Equifax, Trans Union, and Experian. Each of them will, for a small fee, provide your credit report on-line or via snail-mail. Get a copy of all three reports, because one might list errors that the others don't, and you want to know all of the issues a lender might raise so there are no surprises.
Your credit report will show all the consumer credit that has been extended to you over the past seven years, including
- your highest balance over that time period
- your current balance on the date last reported by a given creditor
- how many timely payments you made
- how many late payments you made, as well as how late theywere (the later you made a payment, the worse it will look to a potential lender).
Have a less-than-stellar credit history? Well, I won't lie to you: that could mean lenders will charge you significantly more for a given loan than someone with a good credit score. However, keep in mind that:
- Your credit file only contains information over the past seven years, so that's all a potential lender will see. (Bankruptcy filings can be reported for 10 years.)
- Because you're taking out a loan now, lenders are most concerned about your recent credit history. That doesn't mean what you did long ago won't count. But if you've cleaned up your act and paid your bills on time for several years, the lender will take note of that.
Because your credit history is crucial, if you're thinking about buying a home — or even if you're not — order your report today.
Below is the contact information for the three credit agencies.
- Equifax: 1-800-997-2493; equifax.com
- TransUnion: 1-800-888-4213; transunion.com
- Experian: 1-888-397-3742; experian.com
Source: The National Association of Realtors
Rino Maddalena is an Associate Broker with Llewellyn Realtors. To contact Rino for all of your Real Estate needs call (301) 717-1075 or via e-mail at firstname.lastname@example.org.