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Chapter 2: Checking Your Credit Score

How to check your credit reports

Under federal law, you can check credit reports from the three major reporting bureaus for free every 12 months by making a request through www.annualcreditreport.com. It’s important that you check your credit reports regularly to ensure the information they contain is accurate and to help protect yourself from fraud (like someone stealing your identity and opening credit accounts in your name).

While the multi-page credit reports you receive from Equifax, Experian, and Transunion may look overwhelming, take the time to review them, looking specifically for the following:

  • Incorrect personal information (including name, address, birth date, and social security number)
  • Unrecognized accounts, including credit cards
  • Inaccurate account information, such as a closed account being noted as open
  • Inaccurate payment history, such as credit accounts being marked as past due
  • Incorrect credit limits and/or balances
  • Unauthorized credit pulls, which could indicate you’ve been a victim of fraud with someone attempting to open a credit account in your name
  • Inaccurate reporting of bankruptcies, foreclosures, liens, and judgments

How to contact credit reporting bureaus

If you find errors or inaccuracies on one or more of your credit reports, be sure to contact the credit bureau to report the issue and/or file a dispute. All three credit reporting agencies offer customer support by mail as well as online dispute resolution:

Experian

P.O. Box 4500

Allen, TX 75013

Equifax

P.O. Box 105069

Atlanta, GA 30348-5069

866-349-5191

Transunion

P.O. Box 2000

Chester, PA 19016-2000

800-916-8800

How to check your credit score

While you are entitled to receive a free copy of your credit report from each of the three main credit bureaus each year, the Fair Credit Reporting Act does not give you access to a free credit score. That being said, many banks and credit card providers allow you access to your score free of charge. Check with your bank credit card issuer.

Generally speaking, however, you will have to pay to see your FICO score. There are only a few retailers authorized to provide and sell FICO scores to consumers. Expect a one-time check of your score (say, when you’re getting ready to apply for a mortgage loan) to cost you about $20.

Understand, however, that the credit score you purchase from FICO may differ from the score your prospective lender sees. The score you purchase is most likely an “educational” credit score that considers a wide array of credit products, from auto loans to consumer credit scores, and thus provides you a general idea of where your credit stands. 

Is my credit score in good shape?

FICO Score Ranges

While credit scores can range from 300 to 850, a good credit score (as in one that is likely to enable you to qualify for a conventional mortgage loan) is 670 to 739. Meanwhile a score of 800 or above is considered excellent and will often not only qualify you for a mortgage loan but will help you qualify for a more competitive interest rate as well. 

Your credit score reflects your payment history (are you paying your bills on time?) as well as how much you owe, the length of your credit history, and your credit mix (do you hold a mortgage, auto loan, and credit cards?). 

How your FICO score differs from your mortgage credit score

Understand when you’re applying for a mortgage loan, however, your lending institution will pull a much more specific score called the Residential Mortgage Credit Score (RMCS), which is focused on your ability to repay a loan on a house as opposed to a credit card. You may find your RMCS is lower than the educational score you purchase from FICO. Mortgage lenders’ scoring model is much tougher, as they need to know for certain you can pay back large debts.

Lenders will not only likely pull credit reports from all three reporting bureaus, the information they see reported for your RMCS can be quite different from what you’ll see with a FICO score. Among the items that go into determining your RMCS are the following:

  • Trended credit: Do you pay off most or all of your credit card balances each month, or do you make only minimum payments?
  • Collections and charge offs: Do you have a large medical bill from a surgery that you never finished paying and it went to collections? Mortgage lenders have a much bigger interest in whether or not you’ve shown delinquency on paying large bills for things like medical procedures.
  • Bankruptcies and foreclosures: Unsurprisingly having either of these on your credit report is going to negatively impact your RMCS since mortgage lenders are more risk-averse when it comes to lending money to individuals who’ve already demonstrated they might default on a loan.
  • Employment history and income: These won’t show up on the free credit report you receive in the mail, but they’re often part of an RMCS because the lender wants to know you have a reliable source of consistent income. 

If you’re concerned the deeper view into your creditworthiness via an RMCS could decrease your chances of qualifying for a mortgage loan or at least obtaining an affordable interest rate, there are a lot of things you can do to improve your score, often in a relatively short time frame. 

  • You can check credit reports from the 3 major reporting bureaus for free every 12 months by making a request through www.annualcreditreport.com.
  • While the multi-page credit reports you receive from Equifax, Experian, and Transunion may look overwhelming, take the time to review them, looking specifically for inaccurate information.
  • If you find errors or inaccuracies on one or more of your credit reports, be sure to contact the credit bureau to report the issue and/or file a dispute.
  • The credit score you purchase from FICO may differ from the score your prospective lender sees. The score you purchase is most likely an “educational” credit score that considers a wide array of credit products, from auto loans to consumer credit scores, and thus provides you a general idea of where your credit stands.
  • When you’re applying for a mortgage loan, your lending institution will pull a much more specific score called the Residential Mortgage Credit Score (RMCS), which is focused on your ability to repay a loan on a house as opposed to a credit card. You may find your RMCS is lower than the educational score you purchase from FICO.