Putting Your Best Credit File Forward 

Securing a home loan requires a good deal more than a winning personality. In fact, there is nothing personal about it. Your credit union evaluates credit worthiness objectively using two indicators - your credit report and your credit score. Taken together, both help your credit union determine how likely you are to repay in a timely fashion, or default on the loan.

You can significantly improve your chances of securing a home loan by first doing a credit check up. Address any errors or problems you encounter before approaching your credit union to avoid the disappointment of denial. Your credit report is the best place to start.

Your credit report

Your credit history is compiled by three separate agencies called credit bureaus. These are Equifax, Trans Union and Experian. It is important that you contact each agency for a copy of your report. Activity reported by one bureau may not necessarily be reported by another. You must review all three to get a complete picture of your credit history.

Although the specifics may vary, each bureau collects the same kinds of information. This includes:

•  The amount and types of debts you carry including credit cards, car and student loans, etc.

•  Your employment and residential history.

•  Your payment history – usually expressed in terms such as, pays as agreed or number of days and number of times late. For example: 0-30 days = 2; 30-60 days =1; or 120 + days = 0. As you might imagine, late payments are cause for concern among lenders. You will not be granted a loan if the risk seems too great.

•  Public information concerning liens, garnishments and bankruptcies.

•  Inquiries - each time you apply for credit an inquiry is recorded on your report. Too many inquiries are regarded as a red flag, and should be avoided.

Also of note:

•  Your credit report does not contain identifying information, such as your race or ethnicity that can be used to discriminate against you.

•  All inquiries conducted during a two-week period may be counted as one inquiry.

•  The credit bureaus do not make recommendations or determinations as to your credit worthiness.

eview your reports carefully for errors. Forward written corrections, along with any information you have to support your claim, to the appropriate bureau. If the matter cannot be resolved with the credit bureau or the creditor, you do have some recourse. As a last resort, you are permitted to include an explanation of up to 100 words on your credit report.