{"id":1348,"date":"2018-02-06T20:44:33","date_gmt":"2018-02-06T20:44:33","guid":{"rendered":"http:\/\/blog.himorty.com\/?p=1348"},"modified":"2024-02-23T14:19:43","modified_gmt":"2024-02-23T19:19:43","slug":"credit-basics-understanding-credit-report","status":"publish","type":"post","link":"https:\/\/www.morty.com\/resources\/money-matters\/credit-basics-understanding-credit-report","title":{"rendered":"Credit Basics for First-Time Homebuyers"},"content":{"rendered":"\n
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Before a lender offers you a loan or line of credit, that lender wants to know the answer to one very important question: <\/em><\/p>\n\n\n\n

If I loan money to this person, how likely is it that this person will pay me back? <\/em><\/p>\n\n\n\n

Lenders use credit reports and credit scores to determine how risky it might be to loan money to a prospective borrower.<\/p>\n\n\n\n

Your credit rating determines whether lenders will be willing to work with you, and how much it\u2019ll cost you to borrow money. Unless you intend to pay for your future home with cash you\u2019ve been stashing in your mattress, understanding how credit works is essential to your financial well-being. (Editor\u2019s note: you should definitely not be keeping large sums of cash in your mattress.<\/em>)<\/p>\n\n\n\n

In this guide, we’ll cover credit basics: how credit reports work, building and protecting your credit scores, and how make sure that your credit is setting you up for your best financial future.<\/p>\n\n\n\n

Credit Reporting Agencies<\/h2>\n\n\n\n

In the United States, consumer financial activity is tracked by three credit reporting agencies: Experian<\/a>, Equifax<\/a>, and TransUnion<\/a>. <\/p>\n\n\n\n

Because there are three separate companies, just about everyone has three credit reports\u2014one at each of the three credit reporting bureaus.<\/p>\n\n\n\n

(Technically, you could have less than<\/em> three credit reports. Young people with limited credit histories, recent immigrants, and off-the-grid types committed to the notion that cash is king<\/em> may not have files at all three credit reporting agencies. But the credit reporting agencies work pretty hard to try to collect information about everyone. Most people have credit histories on file with all three.)<\/p>\n\n\n\n

Your credit reports should be basically the same from each of the credit reporting agencies. But should be<\/em> is not the same as will be<\/em>, of course. Often there are differences from one credit reporting agency to the next.<\/p>\n\n\n\n

Requesting Copies of Your Credit Reports<\/h2>\n\n\n\n

If you are considering purchasing a home in the near-ish future, or even if you just want to get a handle on actively managing your credit, your first step is to get a copy of your credit report from each of the three credit reporting agencies.<\/strong><\/p>\n\n\n\n

By law, you\u2019re entitled to one free copy of your credit report per agency per year. You can request your reports from all three credit reporting outfits at the same time, or stagger your requests throughout the year. <\/p>\n\n\n\n

The simplest way to obtain your credit reports is to head to AnnualCreditReport.com<\/a> and request one through there. (Eagle-eyed readers will notice that that\u2019s not a .gov web address. But that is the official site contracted by the FTC for handling credit report requests from American consumers.)<\/p>\n\n\n\n

What\u2019s On Your Credit Report?<\/h2>\n\n\n\n

On your credit report, you\u2019ll find:<\/p>\n\n\n\n

Personal Identifying Information<\/strong> <\/h4>\n\n\n\n

At a minimum, your report should have your full name, your address, your social security or taxpayer identification number, and your date of birth. It\u2019ll probably have previous addresses listed as well.<\/p>\n\n\n\n

Credit and Payment History<\/strong> <\/h4>\n\n\n\n

This is the meat-and-potatoes portion of your credit report. Here, you should find:<\/p>\n\n\n\n