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Your Mortgage & Your Credit

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Your credit rating is one of the primary considerations that a mortgage lender uses when deciding whether or not to approve your mortgage loan. This will also help them determine your mortgage interest rate. Credit ratings have become much less restrictive when applying for loans today; however, excellent credit will guarantee a better interest rate.

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The first thing you must do is ensure your credit reports are accurate. To do this you’ll need to request a copy of your credit report from each of the three credit reporting agencies: Equifax, Experian, and TransUnion. Be careful when obtaining your credit reports as many companies providing these reports will almost always try and sell you services that you do not want or need.

Recent legislation requires reporting agencies to provide one free copy of their credit history per year. You can sign up for this at:

http://www.annualcreditreport.com

This site will allow you to receive one report for each of the reporting agencies every twelve months. If you are unable to use this service or need additional reports you will need to pay for them.

Don’t pay for credit reports… Congress passed a law making them free for everyone.

You will need to carefully review each of these credit reports for errors. If you discover errors you can dispute items on your credit report by contacting the individual credit agency. Contact information for each credit agency is listed below:

Equifax

http://www.equifax.com
(800) 685-1111

Experian

http://www.experian.com
(888) 397-3742

TransUnion

http://www.transunion.com
(800) 916-8800

The credit agencies use the information on your credit history to calculate your credit score. A credit score is a complex forumla that evaluates the many types of information found in your credit file. A credit score is used by lenders to help determine whether a person should qualify for a loan, credit card, or service such as a cell phone. Most credit scores estimate the risk incured by lending an individual money or providing them with services: specifically, the likelihood that a person will make their payments on time during the next two to three years. Generally, the higher the score, the less risk the person represents to a lender. The free credit reports you receive online typically do not show your credit score; however, you probably won’t need it and if you do your lender will tell you what it is.

You can learn more about your credit and your home loan by checking out my free Underground Mortgage Refinancing Videos.

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