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Questions frequently asked by borrowers

Use this section as a handy reference guide to help answer your borrowers credit reporting questions.

  1. How are my credit reports generated?
  2. Where does the information come from?
  3. What is a credit score?
  4. How is a credit score calculated?
  5. How can I learn how to improve my credit score?
  6. After I apply for a loan and get approved, can I make purchases on credit before closing without endangering my home loan?
  7. I pay my bills on time every month. Why does my credit score seem low?
  8. I have a good job and no debt because I pay outright for my purchases. My credit score is still low. How can I raise it?
  9. There is an inquiry on my report from Advantage Credit. How did it get there?
  10. How do I correct errors on my credit report? How long does it take?
  11. How can I speed up the processing of credit report corrections?
  12. Why do Experian, TransUnion, & Equifax report slightly different information?
  13. How long does a bankruptcy, collection account or judgment stay in my credit file?
  14. I have inquiries on my credit report that I didn't authorize. What should I do?
  15. I have activity on my credit report showing debts that are not mine. What should I do?
  16. Can I get a copy of my own credit report from Advantage Credit?
  17. Why is my credit being mixed with that of my relatives or others with similar name?
  18. I don't have any credit, how can non-traditional credit can help me?
  19. My report is in English, how can I obtain it in Spanish?
  20. Download a consumer credit report error dispute packet free
1. How are my credit reports generated?

Advantage Credit receives a credit report request from our customer, usually the mortgage broker. We in turn send the borrower's information (name, address & Social Security number) to one or more of the three credit bureaus (Equifax, Experian & TransUnion), and within seconds we receive the borrower's information in the form of a raw data file from each bureau. Advantage Credit's system then compiles all three raw data files into one report and places it onto a credit report form. The report is then made available to the mortgage broker.

Advantage Credit does not change anything on the credit report returned from the initial request. However, upon a customer's request and verification of the information requested, certain cosmetic changes can be made. Mortgage brokers will request these changes so that a lender can approve the mortgage loan. Common requests include verifying if an account has been paid, verifying that an account does not belong to the borrower, or verifying whether an account is current.

Advantage Credit makes no permanent changes to the information maintained by the three credit bureaus. Advantage Credit can expedite the process of the bureaus updating their files with corrections if the correct documentation is available (see the Accurate Credit service for more details).

2. Where does the credit report information come from?

The information originally comes from credit granters, such as credit card companies, auto and home lenders, banks, and retail stores. Information is also obtained from court records and may include bankruptcy filings, tax liens, or judgments. Your credit report may also contain employment information.

3. What is a credit score?

Your credit score is a numerical representation of your statistical likelihood to repay credit that is extended to you. Scores range from 300 to 850 or higher, with average scores occurring in the 500-700 ranges.

The credit score comes from a proprietary model developed by Fair, Isaac & Company® (often referred to as "FICO"). The model takes all the detailed account information from your credit report, and processes it with different weights and scoring factors, resulting in the score.

Originally, Fair Issac took thousands of historical credit files on anonymous consumers and compared them with those consumers' eventual default rates on credit accounts. From this perspective, certain factors on credit reports were determined to increase the consumer's likelihood of repayment on a loan.

Each of the three credit bureaus uses a version of the FICO scoring model. There are many variations on the basic FICO model that come from Fair, Isaac itself, as the company releases new versions from time to time.

Today, virtually all loan decisions use a variation of a FICO score model to determine eligibility for credit, accompanying interest rates, down payment requirements and other terms. The rise of automated underwriting has sped up the loan decision process for millions of Americans buying cars, homes and those refinancing their mortgages.

Because credit scores can have a large financial impact on your life, Advantage Credit highly recommends that all consumers become familiar with credit scores and how they work, as well as how to improve a credit score.

See also: Credit Scoring; CreditXpert; Order my Credit Report; myfico.com.

4. How is a credit score calculated?

A credit score looks at each account on your credit report. It then processes it through an algorithm that determines whether the account represents likelihood for repayment or default. Details that factor into the score include on-time or late payments, how late payments are, how many accounts are open, what the proportion of balances to credit limits are, whether there are collections, bankruptcies, judgments, liens or other derogatory reports.

The score is considered a snapshot of a specific moment in time. Scores change with new actions and with the passage of time. The farther in the past derogatory information occurs, the less impact it has on a credit score.

See also: Credit Scoring; CreditXpert; Order my Credit Report; myfico.com.

5. How can I learn to improve my credit score?

Several online sources can provide information on improving and maintaining a high credit score. Start with our detailed overview on Credit Scoring on this website. Also check www.MyFico.com, as well as the websites of the three credit bureaus: Experian, TransUnion, and Equifax.

Also ask your Advantage Credit broker or realtor about CreditXpert®. This is a very low-cost report that scans your credit report for opportunities to improve your credit score, and even estimates the number of points your score could increase based upon recommended actions.  See our Products List page for more details about CreditXpert.

6. After I apply for a loan and get approved, can I make purchases on credit before closing without endangering my home loan?

Many borrowers make the mistake of assuming the loan process is complete from the credit standpoint before the closing, and then make significant purchases on credit, like furniture or a car. They are then unpleasantly surprised to find their score dropped and the lender requiring different loan terms before closing. Good general advice when shopping for a mortgage or refinance loan is not to open any new credit accounts until after the closing.

See also: Credit Scoring; CreditXpert; Order my credit report; myfico.com.

7. I pay my bills on time every month. Why does my credit score seem low?

Even if you have a perfect payment history, you may have other factors that lower your score in the FICO models. For example, if you have accounts that have high balances in proportion to their credit limits ($3,000 balance on a $3,500 credit limit for instance), it can activate a negative factor that can drop your score.

A lower than expected score can also be related to your creditors reporting information in error, or even someone using one or more of your accounts fraudulently. Often, getting turned down for credit is the first step for some people in learning that they have been victims of identity theft. It's a good reason to review your credit report regularly.

See also: Credit Scoring; CreditXpert; Order my Credit Report; myfico.com, Fraud Protection.

8. I have a good job and no debt because I pay outright for my purchases. My credit score is still low. How can I raise it?

When you have no credit activity at all, you can be subject to a low score or sometimes no score. In certain cases, lenders will work with you for loans based on what's known as alternative credit. This is where you gather evidence of paying normal bills on time that don't usually get reported to the credit bureaus—utility payments and rent, for example.

The three credit bureaus will not record this information into your file to generate a credit score, but there are lenders who will work with this type of information to approve a mortgage loan. Also, a newer credit-reporting bureau, PayRentBuildCredit (PRBC), has established a system for using rent payments to build an improved credit rating.

Because credit scores affect so many areas of a consumer's life today, it's important to establish a positive credit history if possible. If you have never purchased on credit, you can open a secured credit card account with many financial institutions. You provide a set amount of cash held to secure the account against future repayment problems. The money is held until the account is closed or until used to satisfy payments not otherwise made as agreed. After 12-13 months of use and consistent, on-time payment, as well as keeping the account balance under 50%, most consumers will see a reasonable credit score taking shape.

See also: Credit Scoring; CreditXpert; Order my Credit Report; myfico.com; PayRentBuildCredit.

9. There is an inquiry on my report from Advantage Credit. How did it get there?

Advantage Credit is a reseller of credit information. We receive our information from the three major credit bureaus: Experian, Equifax and TransUnion. Advantage Credit is sometimes mistaken to be a business entity making an inquiry about a consumer's creditworthiness, but Advantage Credit never initiates requesting a credit report on any consumer without an approved Advantage Credit customer, like a mortgage broker, lender or realtor, who has also obtained your permission, requesting it from us.

If an inquiry is on your credit report from Advantage Credit that is not connected with a home purchase or loan that you authorized either online, by phone or in person, you can contact us to verify who ordered the credit report on your behalf.

See also: Order my Credit Report; Fraud Protection.

10. How do I correct errors on my credit report? How long does it take?

You can correct errors on your credit report directly with credit bureau in question, or you can work with an Advantage Credit mortgage broker to correct errors at the bureau level when applying for a mortgage loan.

Working directly with the three credit bureaus

If you discover incomplete, inaccurate or missing information being reported, follow the steps below.

First, you must file a dispute with one or more of the credit bureaus listed below, depending on the bureau reporting the incorrect information.

Before disputing an item, we advise that you first contact the credit source reporting the information to the bureaus to ensure that your records are being accurately reported. Taking the steps below will help ensure that future reports reflect the corrected information.

Dispute/correction requirements

Inform the bureau in writing which information you believe is inaccurate. Your document should provide the following information for each disputed item:

  • Full company name of the disputed item (from the credit report)
  • Account number of the disputed item
  • Reason for your dispute
  • Copies (not originals) of documents that support your position
  • You may want to enclose a copy of your report with the items in question circled
  • Your current name, address, previous address and phone number so the bureau can contact you
  • For online disputes: The credit report number by bureau.

All three bureaus now offer methods of disputing credit report items online, as well as through traditional methods.

 

By law, the bureaus are required to reinvestigate the disputed information and make corrections to the consumer's file, and will provide the consumer with confirmation and a copy of the corrected file within 30 days.

If you are in the process of applying for a mortgage loan, you have the option of seeking a "rapid dispute" process through your Advantage Credit mortgage broker, which can correct errors and recalculate the credit score in 3-10 days. See #11 below for more details on this service.

See also: Accurate Credit, Experian, Equifax, TransUnion.

FCRA guidelines
www.FTC.gov

The federal Fair Credit Reporting Act gives borrowers specific rights designed to promote accuracy, fairness and privacy of information. Under the FCRA, borrowers must be told if information in their credit file has been used to deny credit. Lenders must give borrowers a copy of the information in their credit file, including a list of anyone who has requested the information recently. They also may have additional rights under state law.

For more information call the Advantage Credit Consumer Assistance Line at (800) 466-9700.

Experian
National Consumer Assistance Center
P O Box 9556
Allen, TX 75013
888-397-3742
www.experian.com
 
Equifax
P O Box 740241
Atlanta, GA 30374
800-685-1111
800-685-5000
www.equifax.com
 
TransUnion
Consumer Solutions
P O Box 2000
Chester, PA 19022
800-916-8800
www.transunion.com


11. How can I speed up the processing of credit report corrections?

The Accurate Credit service from Advantage Credit can help consumers and their mortgage brokers process corrections on credit reports in 3-10 business days. This service requires that you provide documentation for the errors to your Advantage Credit mortgage broker, who then works with Advantage's Customer Service experts to process the corrections directly with the three credit bureaus.

After the corrections are processed and the file re-generated, the credit score is recalculated to reflect the update. Note: Scoring models are dynamic and there is no guarantee that a certain correction will increase a credit score. Scores sometimes decrease with corrections. To find out if an Accurate Credit is right for you, contact your Advantage Credit mortgage broker, or contact us to help you locate an Advantage broker in your area.

12. Why do Experian, TransUnion, & Equifax report slightly different information?

Creditors voluntarily provide information to the credit bureaus and are not required to report their information to all three. The bureaus all report information on a national basis, but some creditors favor reporting to the bureau closest geographically or because of some other preference. This is why occasionally information will be shown on one bureau's report and not another.

13. How long does a bankruptcy, collection account or judgment stay in my credit file?

A bankruptcy stays on the credit report for 10 years. Collection accounts and all other credit report information stay for 7 years.

Recency is a large determinant of credit score results. Having a prior bankruptcy is not always a stumbling block toward getting a home loan, especially if it occurred more than three years in the past. Another tip: If you have a collection account on your credit report older than 3 years, you should avoid paying it off before seeking a home mortgage, as paying off the collection will bring it's date of last activity into the present, which may drop a score from it's current level.

See also: Credit Scoring.

14. I have inquiries on my credit report that I didn't authorize. What should I do?

Some inquiries are made by companies seeking to make offers of credit to you, like credit card companies. These types of inquiries do not affect credit scores. Nor do credit report inquiries made by you.

If there are inquiries that you don't recognize, contact the credit bureaus directly (Experian, Equifax, and TransUnion).

15. I have activity on my credit report showing debts that are not mine. What should I do?

You may be a subject of fraud or identity theft. You should contact the creditor immediately and also contact all three bureaus (Experian, Equifax, TransUnion) for more information on what actions to take.

See also: Fraud Protection.

16. Can I get a copy of my own credit report from Advantage Credit?

Advantage provides consumer credit reports for all three bureaus through our affiliate relationship with Equifax and Myfico.com, but we do not sell credit reports directly to consumers. Click here to obtain your credit report.

You can, however, request to review your credit report with your mortgage broker who obtains it on your behalf. Your Advantage Credit mortgage broker can show you your mortgage credit report for the purpose of asking questions related to the loan process.

17. Why is my credit being mixed with that of my relatives or others with similar name?

The three credit bureaus do not rely solely on a consumer's Social Security number to match the credit file. In fact, they use the number as about the third identifier for a file. The first thing they look for is the name, and then the address. This is where "Junior" and "Senior" files often get mixed.

For those borrowers sharing their homes with extended families, it is very possible for the credit to get mixed because the names will match (or be very similar) and the addresses will match. If this is the case, you can contact the credit bureau reporting in error for assistance.

18. I don't have any credit, how can non-traditional credit can help me?

Non-traditional credit helps establish a file for an underwriter to see credit history. It typically consists of showing a regular, on-time payment history for bills like utilities. Although non-traditional credit will not generate a score, there are FHA guidelines that will allow a loan to be underwritten if there are non-traditional accounts added and verified. This works well for people with no established credit.

In some cultures, using credit is not seen as positive; non-traditional credit is a useful tool to be aware of in these circumstances. In addition, younger people without previous credit history can benefit from non-traditional credit. When your mortgage broker works with Advantage Credit, we can perform the verifications that underwriters would use for this purpose.

Contact us to locate a mortgage broker who works with Advantage Credit.

19. My report is in English, how can I obtain it in Spanish?

Advantage Credit offers free Spanish translations on all credit report orders. If your broker purchases credit reports from Advantage Credit, he or she may provide the report to you at your request in Spanish for the purpose of asking questions pertaining to the loan process.

For information on Advantage Credit mortgage brokers in your area, contact us.

20. Download a consumer credit report error dispute packet free

Advantage Credit can provide consumers a complete credit verification package, including form letters and credit bureau addresses, at no charge. Consumers have the right to dispute inaccurate information contained in a credit report by contacting the credit source, such as a retail store, an auto finance company or a lending institution. The credit source is then required to verify and correct any inaccuracy in the record with the three national credit repositories.

You can download a credit verification package free here. Or call Advantage Credit's Consumer Assistance line at (800) 466-9700 for more information.

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