How's your credit?
You've probably got some sort of credit - credit cards, for example, or loans of some sort (auto loans, school loans, etc.). When you pay off these loans, credit cards, etc., your payment history is sent to credit bureaus.
There are 3 big credit bureaus: Experian (formerly TRW), Equifax, and Trans Union. Each of these credit bureaus maintains extended databases about your credit history. They track any information that might be useful to a potential lender: outstanding loans, credit cards, payment histories, bankruptcies, foreclosures, and lawsuits. Most information stays on your credit card for 7 years; bankruptcies stay on your credit card for 10 years.
When a potential lender - for example, a bank that is considering giving you a mortgage - wants to know whether you are a good risk, they order your credit report from these credit bureaus. If your credit history is positive, you're likely to get a loan at a good rate. If your history is negative, on the other hand, you might be denied a loan, or you might have to pay at a higher rate.
You should check your credit report well before starting the mortgage application process; if there are any problems or inaccuracies, you'll want to clear them up before a lender checks your credit. You can order credit reports on the internet or via phone. Use the following resources:
Equifax: Credit Information Services, P.O. Box 105873, Atlanta, GA 30348, Phone: 800-685-1111, website: http://www.equifax.com
Experian, National Consumer Assistance Center, P.O. Box 949, Allen, TX 75013-0949, Phone: 800-392-1122, website: http://www.experian.com
Trans Union, National Disclosure Center, P.O. Box 390, Springfield, PA 19064, Phone: 800-851-2674, website: http://www.tuc.com
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