Checking your credit score before
you apply for a major loan is a must if you want to
find out how you rank as a credit risk in the eyes
of a lender. Yet checking your credit report also
proves worthwhile before you put in an application.
Put simply, "The credit report is the raw data. A
credit score is the result of a formula applied to
that credit report information," says Craig Watts,
public relations senior manager for Fair Isaac Corp.,
the creator of the FICO score.
Since your credit score is based on
information in your credit report, you'll want to
check your report well in advance of applying for
a major loan to check for inaccuracies and other data
that could harm your score. If you have fantastic
credit, you should check your credit reports a couple
of months before applying for a major loan or refinance
to verify where you stand, says John Ulzheimer, president
of Credit.com educational services. If you have poor
credit, check six months in advance to see if there's
anything you could do to improve your credit score,
he says, such as paying off collection accounts or
paying down large balances.
"The
credit report is the raw data. A credit score is
the result of a formula applied to that credit report
information."
More
than one score, credit report
That doesn't mean you have only one score based on
one report. Three national
credit reporting agencies maintain credit history
information on consumers as data gets reported to
them by lenders. These agencies separately furnish
credit reports to both paying subscribers and consumers
requesting their own file. Lenders can choose not
to report to all three bureaus, which means you might
discover discrepancies among each report produced
by each agency. With that in mind, it's a good idea
to check your credit reports at all three bureaus,
as your credit risk score can vary depending on which
report it's based on.
Getting
a report
You can order one free credit report every 12 months
from each of the big three national credit reporting
agencies, Equifax, Experian and TransUnion, by logging
on to www.annualcreditreport.com,
by calling (877) 322-8228 or by completing and mailing
the request
form (PDF) to Annual Credit Report Request Service
at P.O. Box 105281, Atlanta, GA 30348. Residents in
Colorado, Georgia, Maine, Maryland, Massachusetts,
New Jersey and Vermont can also get free additional
reports by ordering them directly from the agencies,
thanks to their state laws.
If you have
been denied credit, you are entitled to a free copy of your credit report. After
using up your free credit reports, you may purchase them from the credit bureaus.
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Updated: Dec. 17, 2008 |
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