UNDERSTANDING YOUR

TO RECEIVE THE VERY BEST MORTGAGE RATES
YOU MAY NEED TO IMPROVE YOUR CREDIT SCORE

WHAT IS A CREDIT REPORT?

Your credit report records payment histories and the amount of time accounts are open, requests for credit, results of legal proceedings and personal data.

WHO KEEPS TRACK OF MY CREDIT REPORT?

These three major credit reporting agencies use the following scoring models:

Experian - FICO (Fair, Issac and Company) Equifax - Beacon TransUnion - Empirica

WHAT IS A CREDIT SCORE?

Your credit score is a three-digit number and typically ranges from 350 to 850.

HOW IS MY CREDIT SCORE DETERMINED?

The score estimates a consumer's willingness and ability to repay a debt based on previous behavior. The less risk the creditor assumes, the better your rate and term options are.

• 35% of your score is determined by your payment history including the number of accounts paid, number of delinquent accounts and severity of delinquency, previous bankruptcies, judgments, and liens.
• 30% of your score is determined by the amounts you owe and how much of your credit line is in use, amounts you owe on installment accounts as compared to the original balances, and number of zero balance accounts.
• 15% of your score is determined by the length of time of your credit history, total time of credit history as tracked by the credit bureaus, and the length of time since accounts were opened.
• 10% of your score is determined by new credit and the number of recent new accounts, the proportion of new accounts to existing accounts, and the number of recent inquiries.
• 10% of your score is determined by other variables.

HOW DOES MY SCORE AFFECT MY INTEREST RATE?

Creditors typically assign grades to scores and use these grades to determine interest rate and loan features.

• An "A" paper grade allows creditors to offer the most competitive interest rates and the most creative and flexible loan terms.
• A "B" paper grade allows creditors to offer good interest rates as well as some creative financing.
• A "C" paper grade allows creditors to offer higher interest rates and less creative financing.
• A "D" paper grade allows creditors to offer the highest interest rates and the least creative financing.

OTHER FACTORS THAT AFFECT RATE

• Length of time at your current residence.
• Length of time at your job and/or chosen field.
• The amount of debt you have as compared to the amount of your household income.

TYPES OF CREDIT REPORT INFORMATION

Personal  Your name and any aliases Current and previous addresses Social Security Number Birth date Current and previous employers

Credit History  Name of the creditor and type of debt Repayment history with each creditor Credit limit for each creditor and highest balance Whether credit line is closed or open, and if closed, why it was closed and who closed it

Public Records  Bankruptcies Tax liens Monetary judgments

Inquiries  Identifies who requested your credit report, when it was requested and the reasons why the report was requested.

MANAGING YOUR CREDIT REPORT

Obtain a copy of your credit report and review it at least once every 12 months.

Contact one or more of the agencies listed below to request a copy of your report:

FACTORS AFFECTING YOUR SCORE

Inaccurate payment history information including payments that are listed as late that were actually paid on time.

Debts you paid off that are still listed as outstanding.

Old debts (7+ years) such as medical collections, public service collections, tax liens and unpaid judgments or lawsuits should be removed from your credit report after 7-10 years (depending on the particular type of debt).

WHAT IF YOU FIND AN ERROR?

To protect your rights, report errors in writing. After you've notified a credit-reporting agency of your dispute, by law they have 30 days to investigate. If the credit-reporting agency can't verify the information, it must be removed.

If the information is later determined to be accurate, it will be reinserted on your report.

Additional reports can be sent to companies you requested credit from within the last 6 months and any employer who has requested a report within the last 2 years.

EASY WAYS TO IMPROVE YOUR SCORE

Pay your bills on time.

Pay the full amount due on secured loans each month and on time.

If you can't pay the full amount due on secured loans, request to make an interest-only payment until you can make the full payment.

If your financial situation is serious, seek the advice of a reputable, non-profit credit counselor.