Thinking about getting a mortgage in the future?
Better start grooming that credit report now.

During my employment at one of the credit reporting agencies, one of my duties, in addition to many other tasks, was dealing with mortgage brokers calling to have some “negative blips” on their client’s credit reports fixed.

My first question was to ask when the mortgage application was to go through. More often than not, it was in a couple of days or at most, the end of the week. Next, I would pull up the credit report and inform the mortgage broker of the steps that he/she or their client would have to take in order to tidy up their credit report and an approximation of the time it would take IF all goes smoothly. Of course, as you can image, my answer was never what they wanted to hear. They wanted and expected immediate results.

Once I explain the situation again, in some cases, the caller would become aggressive. I’ve heard just about everything from some pretty choice words to threatening to have me fired from my job. On some occasions, with those particularly over aggressive individuals, the call would get transferred to our manager who would simply re-iterate what we have already told them.

The truth is, be prepared, it’s just not going to happen.

The credit reporting agencies have very strict guidelines in place to protect the consumer and the accuracy of their documents and just because an individual calls in a panic 48hrs before their client’s mortgage application goes through does not and will not make them make changes to an individuals credit report, regardless of how many expletives are blurted out or jobs threatened. There is proper protocol, required documentation and due process. If the item in question is a legitimate mistake or omission, it will be removed, but it takes time.

How much time? Weeks to months. Time frames are also influenced by how fast the individual can provide the proper and accurate documentation. That is why it is imperative to start grooming your credit report as early as possible.

Over the next couple of weeks I’m going to discuss several steps that individuals can do to start improving their credit scores. You may already be aware of some of these points, however, it never hurts to get a fresh perspective. I’ll be posting the first article of a series to will hopefully shed some light, in commons terms, on how to help you improve your credit score.

Step 1 – For the love of God Stop having your credit report pulled

I don’t care whether the local grocery store is offering you a free box of chocolate chip cookies or a free blanket of your favorite NHL team. Contrary to Nike’s popular slogan: Just don’t’ do it.

Many people don’t realize that every time they have their credit reports pulled by a credit grantor (hard pull) that it will lower their FICO score. How many points? No one can say for sure except those who have devised the algorithm to calculate the score. The number of points deducted won’t be dramatic, however, with tighter mortgage regulations every FICO point is an important one.

Several factors concerning your credit history are taken into consideration when the algorithm calculates how many points to deduct from your FICO score. One example of this is the amount of hard pulls over time. For example, a high frequency of hard pulls on your credit report within a short amount of time will have a negative effect on your score. Why? The algorithm interprets this as a potential credit grab. Meaning, you are anticipating rough financial times and are looking to “grab” as much credit as you can before you find yourself in financial woes. That being said, most scoring formulas can differentiate between the credit grab and legitimate shopping around for better interest rates. Individuals are not penalized when they are shopping around for the best mortgage, car or student loan.[source: Equifax Canada, myFICO]

More information about inquiries on your credit report can be found at:

• Equifax
• Experian
• TransUnion (Truecredit)

Want to help improve your credit score?
A step in the right direction is to only have your credit pulled when absolutely necessary.

Remember, every FICO point is an important one.

New Week:
Step 2 - Getting and understanding your credit report

About the author:
Troy Mundle was employed by one of the credit reporting companies where he assisted with customer service, credit analysis and Internet technical support for corporate clients including mortgage brokers and real estate agents.

Although ever effort is made to provide accurate information, ExecSheets does not guaranteed the accuracy of the information contained on this Website. All information regarding this article should be independently verified with the appropriate professionals. The use of any information contained on this page is solely at the users own discretion and risk. By using the ExecSheets Website you agree to the Terms of Service located at www.execsheets.com/terms.php

Last update: February 23, 2010

Canada
United States

Canada Real Estate Agents
U.S. Real Estage Agents

Would you like a listing in our Free real estate agent directory? Details