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Learn a New Term

Credit Score
A statistical summary of the individual pieces of information on a credit report. A credit score predicts how likely it is that a borrower will repay a debt. Lenders use credit scores to determine whether to extend credit and at what interest rate. Also called a risk score.

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Quotable

I don’t have a bank account, because I don’t know my mother’s maiden name.
—Paula Poundstone

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We’ve all heard on radio or TV how to get a “free” credit report online, but there’s only one endorsed by the Federal Trade Commission. AnnualCreditReport.com provides you a report from each of the 3 major credit reporting agencies every 12 months.

The Most Complete Credit Report—for Under $50

The Fair Isaac Corporation (the folks who invented the FICO credit risk score that lenders use) lets you buy all three of your credit reports, all 3 of your FICO credit scores, and all 12 (if you have that many) of your negative reason codes, all for $47.85.

Thanks to Lori Elliott for this resource. Lori points out that, as investors, we can buy our own credit scores and provide copies to lenders, who then do not have to pull your reports themselves until your app goes to underwriting. This can save numerous inquiries on your credit reports—and as you may know, every inquiry reduces your credit score.

If you request a credit report directly from any of the 3 CRA’s you do not get a FICO Score. At best you get their custom credit score, which is not the true FICO Score Mortgage Lenders use.

This technique can be valuable, even when buying a car, or other large purchase. Knowing your FICO scores, you can go into a car dealer, and find our what loan programs(s) you can qualify for before becoming emotionally attached to a vehicle.