A very brief overview of credit reports and credit scores.

What is Credit?

When a lender refers to “checking your credit”, they mean that they are going to be reviewing your credit report when determining whether or not you qualify for a loan.

Your credit report will be obtained from an agency that maintains information about your credit history–that is, your use of credit and how much credit you currently have available to you.

In addition to your credit history, your credit report will include identifying information including your current and past employers, your current and past addresses, and your social security number.

The third component of your credit report is information from public records, including information such as personal bankruptcies, foreclosures, and court judgments.

All recent inquiries about your credit are also included in your report.

Your Credit Score

Credit agencies devise a credit score based on various factors, including payment history, debt owed, and other factors. With a favorable credit score, you may have more options when choosing a mortgage.

Serious delinquencies, accounts turned over to a collection agency, number of accounts with delinquent payments, total amount owed on accounts, or too many accounts with balances can have a negative impact on your credit report and credit score.

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