Be prepared when you need a loan

Jim Guest Jan 16, 2010 2:37 PM

Today, more than ever, it is very important that we check our credit before a lender does. A detailed credit check should be done a few times a year or at least a few months before we apply for a major loan to see where we stand. Even if, typically, multiple inquires from auto or mortgage lenders do not affect most credit scores because they are treated as a single inquiry, when we check our own credit, it will not affect our credit score at all. We can check our own credit from these three major credit reporting agencies Equifax, TransUnion, and Experian through www.annualcreditreport.com. These companies will provide us with a free instance access of our credit report once a year. The credit report will show a list of accounts, the types of credit we have used, current balances, and recent requests for credit. Our payment history is the most important part of our credit history which is used in our credit score calculation. Borrowers with a credit score over 700 are usually offered more financing options and better interest rates. Even though there is a mortgage product for nearly everyone with a lower score, there are some quick options that can be used to raise the credit score such as trying to pay bills on time and maintaining a low amount of overall debt. Also, as stated above, we should check our credit at least once a year to see our progress and identify credit errors and unauthorized credit checks. Any wrong information should be reported immediately to the selected credit reporting agency. When applying for a loan, ask your lender to explain which credit scores will be used and how they affect your loan application. Are you prepared when you need a loan?

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