We, at Manhattan Mortgage Group, appreciate your greatest investment…your home.  Most people do not realize the effect that home ownership has on their credit.  The recognition of this relationship is empowering.  Although we would like to facilitate a loan to all of our applicants, there are oftentimes poor-credit obstructions, which ultimately stop us. 

We have compiled information to help you understand your credit report, what your score means, how it is affected, ways to improve your score, and where to order a report.  By understanding this information, you will be in greater control of your financial state and become more likely to qualify for future loans.

What is a credit report?

A credit report is personalized documentation showing how you have paid your credit card debt and other loans.  It shows how much debt you have, if you have made payments on time, or if you have not paid back some loans at all.  There are four types of information in a typical credit report:

• Identifying information:  your name, current and previous addresses, telephone number, Social Security number, date of birth, and current and previous employers.
• Credit information:  details about your credit cards, student loans, and other loans, including date opened, credit limit or loan amount, balance, and monthly payment.  It also shows your payment history during the past several years, and the names of anyone else responsible for paying the account, such as a spouse or a co-signer.  This is where late or skipped payments, collections, repossessions, and charge-offs appear.
• Public information:  bankruptcy records, foreclosures, tax liens, monetary court judgments and overdue child support.  These records are obtained from local, state, and federal courts.
• Inquiries: the names of those who obtained a copy of your credit report and how often you have applied for credit in the past two years.  Creditors only see the inquiries that you initiate.

In general, creditors or lenders use this information to help determine whether or not you qualify for the loan.  This translates into, “How likely or unlikely are you to default on your new loan payments?”

What is my credit score?

There are numerous computer models that calculate your actual score.  Scores range from 300 to 900, the higher the better.  Average scores lie in the 500 to 600's, while excellent scores fall in the 700+ range.  Please keep in mind that the lender, not a credit score, makes the final decision to approve a mortgage loan application, and they are the best source to explain what your score means in relation to that decision.

How is my score affected?

Paying bills on time is the best way to build good credit.  Conversely, not paying bills on time is extremely destructive to your score.  In addition, there are other factors tied to your score.  For example, not paying your taxes, collections, or court-ordered judgments will hurt your score.  Bankruptcies and repossessions also negatively affect your score.  Because taxes are considered liens, remember that the county has the right to foreclose on your house in the event that they are unpaid! 

These are steps you may take to help build good credit:

• Don't miss loan payments.
• Pay off credit cards every month.
• Charge less than half of the maximum amount available on your credit cards.
• Apply only for the credit you need.
• Pay more than the minimum due each month on your credit cards.
• Use your credit card to establish good credit.

How do I order a credit report?

There are three major credit-reporting agencies.  When you order your report, have ready your Social Security number, date of birth, current and previous addresses for the past five years, and maiden name, if applicable.  Keep in mind that you may have to pay a small fee for the report; however, there may be free credit-reporting services in your area.

Below is contact information for the three major agencies:

The information on the credit report may vary from one agency to another.  This is because not all creditors report their information to all three agencies.  For this reason, you may want to order a report from each of the three agencies listed above.

We hope this information proves to be useful to you.  Should you have questions or concerns, please feel free to contact us at Manhattan Mortgage Group, Ltd.

  * The above information was compiled from “Knowing and Understanding Your Credit”, by the Fannie Mae Foundation, 2001