Credit reports compile data from any merchant or creditor that you may have had an account relationship with. Your report will show account history for any credit account for up to 7 years. If you have any public records on your report such as bankruptcy data, this information may be reported for up to 10 years.
Your credit history is compiled into a “Credit Score” which is used in the underwriting process when applying for a mortgage, or most any other type of loan request. The higher your credit score, the more likely it is that your loan will be approved.
But what information is used to compile your credit score? There are five primary types of credit data that are used to compile your report. This data consists of:
- Payment history
- Amounts owed
- Length of your credit history
- New credit and inquiries
- Types of credit used
Once all of this data is reviewed and processed by a computer program, a credit score is assigned to you. This score can, and does change on a regular basis as your credit data is updated by your creditors. A score of 740 or higher is considered to be very good credit while a score of 619 or lower is considered to be very poor credit.
Before you apply for a mortgage loan, it’s a very good idea to order a copy of your report to see if there is any incorrect credit information. If there is incorrect data, having your report before you apply for a loan will give you the time you need to have the data corrected and possibly have your score increased.