You are most likely already familiar with the concept of "credit," the reputation for paying your bills on time that makes it possible for you to obtain money or goods with the understanding that you will pay for them later. If you are thinking of buying a home your credit history will be very important. But even if you use your credit every day, you may have questions about the credit industry and how it affects you. In today's society, credit is much more complicated than keeping a tally at the local grocery. As a credit-active consumer, you need to know how credit reporting works and what your credit report contains. Before you start searching Michigan homes for sale your Realtor will want you to get a pre-approval letter which means somebody will be pulling your credit report.
What Is a Credit Bureau?
A credit bureau or credit reporting agency is in the business of gathering, maintaining, and selling information about consumers' credit histories. It collects information about consumers' payment habits from credit grantors like banks, savings and loans, credit unions, finance companies, and retailers. The credit bureau stores this information in a computer database and sells it to credit grantors in the form of credit reports. When you apply for a new credit card or loan, the credit grantor orders your credit report from at least one credit bureau and analyzes the information to decide whether to grant you credit. The credit bureau charges the credit grantor a fee for every credit report sold.
Although credit-reporting agencies provide your credit report to lenders when you apply for credit, they do not make actual lending decisions. It is up to individual lenders to evaluate your credit report and any other factors they consider important and then decide whether or not to offer you credit.
The Three Consumer Credit Bureaus
There are three major credit bureaus providing nationwide coverage of consumer credit information in the United States: Experian, Equifax, and TransUnion. Although many national lending institutions report consumer credit information to all three, smaller banks and other credit grantors may report to only one-or even none. Therefore, your credit report from one credit bureau is not necessarily exactly the same as your credit report from another.
What Exactly Is a Credit Report?
A consumer credit report is a document that contains a factual record of an individual's credit payment history. Credit grantors are permitted by law to review your credit report to objectively determine whether to grant you credit. There are 190 million credit active people in the United States who have a charge account, car loan, student loan, or home mortgage. As those people pay their bills, most lenders report credit payment information to credit bureaus. So most of the information in your consumer credit report comes directly from the companies you do business with.
What Information Does a Credit Report Contain?
A consumer credit report contains four types of information: identifying information, credit information, public record information, and inquiries.
Identifying information includes:
Your name
Your current and previous addresses
Your Social Security number
Your year of birth
Your current and previous employers
If you're married, your spouse's name
Credit information includes credit accounts or loans you have with:
Banks
Retailers
Credit card issuers
Other lenders
Public record information includes any information that's contained in state and county court records, like:
Bankruptcies
Tax liens
Monetary judgments
Inquiries indicate to other credit grantors that you have applied for new credit that could result in additional debt. Potential lenders view multiple recent inquiries on your credit report as a sign that you are overextending yourself.
What is a Credit Risk Score?
A credit risk score is a statistical summary of the information contained in a consumer's credit report. Sophisticated mathematical processes calculate scores by assigning numerical values to various pieces of information in the credit report. Credit bureaus provide risk scores to credit grantors who use them to objectively evaluate an applicant's credit-worthiness. The score itself is relative and will be viewed differently by creditors depending on numerous factors, including the creditor's risk level, marketing goals, and business practices. Your risk score will change over time as your credit history develops.
Does a Credit Report Contain Other, Unrelated Personal Information?
No. Your consumer credit report does not contain information about your race, religious preference, medical history, personal lifestyle, personal background, political preference or criminal record.
How long Does Information Stay on My Credit Report?
Positive credit information remains on your report indefinitely, although information about an account will cycle off your report if no new information is reported about it for seven years. (Thus, a closed account will disappear from your report seven years after it is reported closed by the credit grantor.)
Most negative information remains for up to 7 years. Bankruptcies can remain on your credit report for up to 10 years. Other public record information can remain for up to 7 years. Most inquiries stay on your credit report for up to two years.
What Is a Mortgage Report?
A mortgage report is a special credit report that lenders use prior to deciding whether or not to extend you a home loan. Each report is compiled from credit reports from two or three credit bureaus. The mortgage credit reporting company purchases credit reports from the credit bureaus, combines them, and manually verifies specific information such as employment, credit account balances, and public record information.
What Is an Employment Report?
An employment report is a modified credit report that helps potential and current employers make hiring and promoting decisions. The employment report contains much of the same information about your loans and credit cards that your credit report has listed. However, your marital status, year of birth, and account numbers are omitted from the employment report.
Who May Check My Credit Report?
Federal law carefully regulates how credit reports can be used and by whom. By law, you have the right to obtain your own reports at a reasonable price. Before they can access consumer credit information, businesses must offer proof that they will be using the data for no other purpose than that allowed by federal law.
So when you get ready to relocate to Michigan or just buy a home in Michigan it helps to know what your credit is, how to improve your credit, and what mortgage companies are looking for. I am a local mortgage person right here in Livonia, Michigan. You can meet with me at your home, your office, or at my office at a time convenient to you. So when you are searching Livonia Real Estate, Novi real estate, or any Michigan house for sale I can help you get the money and the advice on what to do to get the home of your dreams. Applying for a mortgage, getting a mortgage approved by a lender is stressfull when buying investment properties, foreclosures, or just a home for you and your family. Let me solve the issues and make your Michigan home purchase smoothier and easier. Whether you are buying Wayne County Real estate, Livingston County real estate, Oakland County Real Estate, or Washtenaw County Real Estate we can meet with you and get you into the home of your dreams. Contact me by phone (313) 310-9855 or email me to get started and get a good rate on your new home. Feel free to search for Michigan Homes for sale on my website and read buyer tips. Or if you are just getting prepared to sell your home I have 50 pages of sellers tips and how to get your home ready to sell. Millage rates, and lots of city information. Crime statistics, school information, city info on Livonia, Plymouth, Novi, Canton, Redford, Garden City, Dearborn, Salem Township, Brighton, South Lyon, Northville and many other cities. Russ Ravary
Russ Ravary is a licensed real estate agent in the State of Michigan and a Realtor.
Photos, Comp and Listing Information Courtesy of Realcomp II Ltd, Properties shown have been listed and sold by various MLS member REALTOR® agents.
I do not guarantee or warrantee any of the above information. Please feel free to verify any of the facts. I recommend to always have a home inspection, always consult an attorney about contracts, Purchase agreements and any legal questions. Also consult a CPA or accountant about tax consequence regarding a Michigan home sale, or Michigan foreclosure.