About Your Credit Report

In many cases when purchasing a property your credit report is more important than the cash you have in the bank. There are some obvious exceptions, for example if you are purchasing a property without getting a mortgage, paying cash. More often than not, a mortgage is used for financing a property. Your credit report is extremely important when borrowing money. We touch briefly on what to expect on your report, and what affects it.

What you can expect to see on your credit report

• Name
• Address and previous addresses
• Social Security number
• Date of birth
• Employment
• Credit lines (mortgages, auto loan, credit cards, etc.)
• Date credit line was opened
• Balance of a trade line
• Limit or loan amount of credit line
• Collections, foreclosures, bankruptcies, judgments and liens, if any

FICO score

Your FICO score is used to determine how much of a risk you are to a lender. Will you pay them back the money they are loaning? More often than not your FICO score is used to determine your credit worthiness. The higher your FICO score the less risk you are in the eyes of a lender. The lower your FICO score is, the greater the risk you are to a lender, the higher interest rate you should expect to pay and/or more of a down payment may be needed.

What affects your FICO score?

15% - Length of Credit History

• 7 years is optimal
• Shorter than 7 years hurts your score

30% - Amount of Debt that is Owed

• Credit used out of total available credit
• More than 50% on Credit Cards is bad, Less than 30% is optimal

10% - Types of credit

• Revolving, Installment, Mortgage
• A mix is good, too many of one type can hurt

10% - New Credit

• Time since last applied for credit
• How many new accounts were opened

35% - Payment History

• Do you have any late payments?


• If so, how late are those payments?


• Missed Payments?

The three major credit reporting bureaus

• TransUnion
• Experian
• Equifax

All three credit bureaus report the same information in different ways. Usually when you have your credit report pulled by a lender three different scores will show. In most cases all three should be close to one another. Every lender is different. Some may take the middle FICO score of the three produced by these agencies. Another lender may only use one of these agencies. If you are looking for additional information regarding your credit report / FICO score, or how to improve it, contact a local bank or mortgage broker.

You should check your credit report every three to six months. Contact the credit bureaus immediately if you notice a mistake or error.