Credit Reporting Bureaus

There are three credit reporting bureaus - TRW (Experian), Equifax, and Trans Union. Under normal circumstances creditors will report your payment history to only one of these organizations. Credit items such as foreclosures, tax liens, and judgments are often sent to all three credit bureaus. There are independent credit agencies that then take the information from all three major bureaus and combine it into one document usually called a Residential Mortgage Credit Report. The company providing this service will contact your employer to verify employment, as well as calling your landlord to verify rent payments. They will also eliminate duplicate entries, and update and correct all your other accounts. An average cost for this service is $50- $60.

What if there are mistakes on my credit report?

If there are mistakes on your credit report, the Borrower can provide letters from the creditor in question, or an explanation of the error, and the agency will contact the creditor, and make the necessary corrections. If you have recently paid off an account, the agency will contact the creditor to get your most recent balance and put that information on your report. If you have paid off a collection or a judgment, you may need to provide copies of receipts or a "Paid in Full" letter to the credit agency. If a creditor says they will correct your report, ask for a letter from them for your files, indicating how they will resolve the problem. Save this document, as you will need it later if the creditor is slow updating your file. Sometimes these changes and corrections will require the credit agency to issue a supplemental credit report after all the accounts have been verified. There is normally no extra charge for these supplements.

How can incorrect information affect you?

If the loan underwriter does not have the correct status of your accounts they could deny you a loan because you appear to have bad debts or a derogatory payment history. You could appear to have to many debts in relation to your income. Before a loan application is sent to an underwriter it is critical that the Borrower and the loan officer review the the report carefully for accuracy.

When is a payment considered late?

If you have made a payment but incurred a late charge it may not be reported to the credit bureau as late. Most creditors do not report a late payment unless it is received at least 30 days after the due date.

What period of time will be reviewed on my credit report?

A credit report can include information as much as 7 years old. If you have had a major credit issue, such as a bankruptcy, repossession, or foreclosure that entry will probably remain on your report for many years. Even late payments will continue to be shown on your report for a few years after they occur. Collections or judgments that are not paid will continue to be reported as such until they are paid in full. The most important time period for a loan underwriter is the past 12-24 months. Even if you have had credit problems in the past, if you can prove that you have made all your payments promptly in that time period, have re-established credit with new creditors, and have not had any recent derogatory credit they may be able to approve your loan request.

One way of documenting your payment history is to keep the canceled checks from all of your creditors. Since most landlords do not report to a credit bureau until a late payment has occurred, it is helpful to keep copies of rent checks to help document your payment history for you residence.

Can I get a mortgage if I have had credit problems?

Yes you can. You will need to show that your current credit (the last 12-24 months) is good, with no late payments. If you have collections or judgments they will need to be paid in full before you can be approved for a mortgage.

If you have declared a Chapter 7 bankruptcy you will need to document when it was discharged by providing the court documents for the bankruptcy to the lender. With a Chapter 7 bankruptcy you will need to have re-established credit and not have any late payments since the discharges date. If you have declared Chapter 13 bankruptcy you need to prove that your payments to creditors have been on time for a minimum of 12 months. Even if these conditions are met an underwriter is under no obligations to approve a mortgage.

What are "No Income Verification Loans"?

These are loans for Borrowers that do not wish to disclose their income for qualifying purposes. Usually to do this type of loan the Borrower must be self-employed, and have a minimum of 20% of the cost of the home to use as a down payment. Of equal importance is that the Borrower, in this case, must have perfect credit.

How can I get a copy of my credit report?

Most states require that the three major bureaus provide you with a free copy of your credit report one time per year. Under certain circumstances you may be able to get a copy by phone request, but usually you will need to request it in writing. It will take about 30 days to receive your copy back.

Equifax
P.O. Box 740256 
Atlanta, GA 30374 
(800) 685-1111 or in Maryland (800) 807-3848

TRW (Experian)
P.O. Box 2105 
Allen, TX 75013-9505 
(800) 422-4879

Trans Union
1561 E. Orangethorpe Avenue 
Fullerton, CA 92631-5207 
(800) 858-8336 or in Maryland (800) 516-8289