Whether you are planning to purchase a home or you are applying for a refinance, your credit history will perform a vital role in the approval process. In the United States, there exist three major credit-reporting agencies that gather financial information from creditors, public records and other consumer credit sources. Experian, Trans Union and Equifax each collect and compile facts about individuals and their personal credit record.
Through the use of statistical analysis, the three bureaus have each developed a mathematical model designed to determine what type of risk people present to any creditor offering financing. A consumer’s credit history is then converted into an actual score that in turn determines the type of financing which individuals will qualify.
While most payment history is automated, there is always the human element. As such, the possibility for error always exists. Although inaccuracy on your credit report can be an insignificant matter, it can also have serious consequences. Therefore, it is particularly important to review your credit every six to twelve months and address any factual errors or derogatory credit that may have been reported.
