Fiction: The credit score on my consumer credit report should be the same as the one the mortgage company returns.

Fact: When mortgage companies order a credit report the credit bureau will include a “mortgage adjustment” that’s factored into the client’s credit score. These adjustments are not controlled by the mortgage lender, but by the credit bureaus themselves. This adjustment takes a client’s past mortgage history into account, will weight the mortgage history and reflect accordingly in the credit scores. For example, a client with an extensive on-time history of mortgage payments will have a different adjustment than a one who has never had a mortgage.

Fiction: There’s nothing you can do to fix errors on your credit report.
Fact: Clients who have errors on their credit report have the ability to file a dispute with the credit bureau to correct the erroneous information. You can go to www.annualcreditreport.com and obtain a free copy of your credit report. You will need to submit documentation supporting a claim the information reported is in error, and the credit bureau has 30 days to confirm the information and update the repositories.  

Fiction: My score will drop if I apply for new credit.
Fact: If it does, it probably won’t drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called “inquiries”) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

Fiction: A poor score will haunt me forever.
Fact: Just the opposite is true. A score is a “snapshot” of your risk at a specific point in time. It changes as new information is added to your credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you will put yourself in a better position to get approved for a loan.

Would you like to know more about credit or the mortgage process?  Call me, or e-mail me and we can schedule a personal consultation.