Credit History

Your credit score is a vital part of your credit health.  When you are applying for credit a lender wants to know your payment history in order to understand your credit risk. To understand this most lenders will look at your credit report. A credit report is a summary of your financial reliability for the most part, your history of paying debts and other bills.

A credit score is a number lenders use to help them decide if they should give a person a loan. A mortgage application can be approved within hours instead of weeks for borrowers who score above a lender "score cut-off".

The three major credit reporting agencies Equifax, Experian and TransUnion compiles credit reporting data from many sources and creates a credit file that reflects your personal credit history including your FICO® score, and are made available to lenders.

Lenders who use credit scoring can approve more loans because credit scoring gives them more precise information on which to base their decisions.

When you apply for a loan or mortgage you authorize your lender to ask for a copy of your credit report. This report lists the types of credit you use, the length of time your account remained open, and whether you paid the bills on time. It reveals many aspects of your borrowing activities.

With the report the lender can also buy a credit score based on the information in it.

The ability to quickly, fairly and consistently consider all this information is what makes credit scoring so useful.

Tips for raising your score

· Pay your bills on time: delinquent payments and collections can have am ajor negative impact on your score.
· If you havemissed payments, get currentand stay current: the longer you pay your bills on time the better your score
· Be aware that paying off a collection account or closing an account on which you previously missed payment  will not remove it from your credit report: The score will consider this information because it reflects your past credit pattern.
· If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time. And you won’t lose points for seeing a credit counselor.

If your credit report contains errors, it is most likely because it is incomplete, or contains information about someone else. There are reasons why these errors can occur such as:
· You applied for credit under a different name
· Some one made a clerical error in reading or entering name or address information from a handwritten application
· You gave an inaccurate social security number or the lender misread the number.
· Loan or credit card payments were inadvertently applied to the wrong account.

If you find an error in your credit report, the credit-reporting agency must investigate and respond within 30 days. If you are in the process of applying for a mortgage, immediately notify the lender of any incorrect information in your report.