Credit grading for the purposes of accurate bidding relies on you, the customer, to be candid about your past payment history. For our purposes, we will give you a guide to help you pick the right "grade" for your credit, without having to pay for a credit report. However, to secure a bid rate, the lender can require one.

EXCELLENT (A+): Assumes credit scores above 660. For the rest of us, this means no 30 day late payments of any kind in the prior 12 months, no 30 day late payments on a mortgage ever, and no substantial lateness (60-90 days) on car loans, credit cards, lines of credit, etc. in the past five years. NO BANKRUPTCIES. Virtual perfection!

GOOD (A): Assumes credit scores above 620. Translation: Typically, no mortgage lateness prior 24 months, no lateness on installment loans (car payments, credit line) within prior 12 months, no significant lateness on revolving (credit cards) over 30 days in prior 2 years. Bankruptcies discharged at least four years. No judgments pending or filed. Very few loose ends are allowed.

FAIR, POOR, TERRIBLE (B,C,D): LENDER OR MORTGAGE COMPANY WILL REQUIRE A CREDIT REPORT PRIOR TO BID REPLY.

Many home buyers are very worried about how their credit report will affect their ability to buy a home. We even heard one story (albeit untrue) that an applicant was denied a mortgage because he had returned a rented videotape late.

Of course, that could never happen. Most people will not need to worry about the effects of their credit history during the mortgage process. However, you can be better prepared if you get a copy of your credit report to review before you apply for your mortgage. That way, if there are any errors you can take steps to correct them before you submit an application.

If you have had credit problems, be prepared to discuss them honestly with your mortgage lender and come to your application meeting with a written explanation. Responsible mortgage lenders know there can be legitimate reasons for credit problems, such as unemployment, illness or other financial difficulties.

If you had a problem that's been corrected and your payments have been on time for one year or more, your credit may be considered satisfactory.

• All Things Being Equal - When you have derogatory credit, all of the other aspects of the loan need to be in order. Equity, stability, income, documentation, assets, etc. play a larger role in the approval decision.
• Worst Case Scenario - When determining your grade, various combinations are allowed but the worst case will push your grade to a lower credit guide. Late mortgage payments and Bankruptcies are the most important.
• Going Once, Going Twice - Credit patterns are very important. A high number of recent inquiries and more than a few outstanding loans may signal a problem. A "willingness to pay" is important, thus late payments in the same time period is better than random late payments as they signal an effort to pay even after falling behind.

 Credit Guide Scoring?

In a nutshell, credit scoring is a statistical method of assessing the credit risk of a loan applicant. The score is a number which rates the likelihood an individual will pay back a loan. The score looks at the following items: past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit, number of inquiries.

 Credit scoring will place borrowers in one of three general categories.

• First, a borrower with a score above 680 and above may be considered an A+ loan. The loan will involve basic underwriting, probably through a "computerized automated underwriting" system and be completed within minutes. Borrowers falling in this category may have a good chance to obtain a lower rate of interest and close their loan within a couple of days.
• Second, a score below 680 but above 620 may indicate lenders will take a closer look at the file in determining potential risks. Borrowers falling in this category may find the process and underwriting time no different than the past. Supplemental credit documentation and letters of explanation may be required by lenders before an underwriting decision is made. Loans within this FICO scoring range may allow borrowers to obtain grade "A" pricing, but loan closing may still take several days or weeks as it does now.
• Third, borrowers with a score below 620 may find themselves locked out of the best loan rates and terms offered by lenders. Mortgage professionals may divert these borrowers to alternate funding sources other than FNMA and FHLMC. Borrowers may find the loan terms and conditions less attractive than the grade "A" loans and it may take some time before a suitable funding source is located.

Credit Reporting Agencies
Equifax PO Box 105873 Atlanta, GA 30348 (800) 685-1111	Experian PO Box 8030 Layton, UT 84041 (800) 520-1221 (800) 682-7654	Trans-Union PO Box 390 Springfield, PA 19064 (800) 916-8800 (800) 851-2674

 How to Correct Errors

You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file. When a credit reporting agency receives a dispute, it must reinvestigate and record the current status of the disputed items within a "reasonable period of time," unless it believes the dispute is "frivolous or irrelevant." If the credit reporting agency cannot verify a disputed item, it must delete it. If your report contains erroneous information, the credit reporting agency must correct it. If an item is incomplete, the credit reporting agency must complete it.

For example, if your file showed that you were late in making payments on accounts but failed to show that you were no longer delinquent, the credit reporting agency must show that your payments are now current. Or if your file showed an account that belongs only to another person, the credit reporting agency would have to delete it. Also, at your request, the credit reporting agency must send a notice of correction to any report recipient who has checked your file in the past six months.

For those items in your credit profile which you feel deserve further explanation (such as an account that was paid late due to the loss of job, military call-up, or unexpected medical bills), you may send a brief statement to the appropriate credit reporting agency. The information will be placed on your credit profile and will be disclosed each time your credit profile is accessed.

Credit Profile A Credit Profile refers to a consumer credit file, which is made up of various consumer credit reporting agencies. It is a picture of how you (as an individual) paid back the companies you have borrowed money from, or how you have met other financial obligations.

There are usually five categories of information on a credit profile:

• Identifying Information
• Employment Information
• Credit Information
• Public Record Information
• Inquiries

What is NOT included on your on a credit profile:

• Your race
• Your religion
• Your health
• Your driving record
• Your criminal record
• Your political preference
• Your income

 Credit Report Access

The Fair Credit Reporting Act (FCRA) outlines specifically who can see your credit profile. Businesses must have a "legitimate business need" and a "permissible purpose," as stated in the federal law to obtain your credit file. Otherwise, only you, and only those who you give written permission, can access your credit files. Your neighbors, friends, co-workers, and even your family members cannot have access to your credit profile unless you authorize it. Any company that receives a copy of your credit profile will be listed under the "Inquiry" section of your report. Some examples of those who can access your credit files are:

• Credit grantors
• Collection agencies
• Insurance companies
• Employers

The Fair Credit Reporting Act (FCRA) is the federal law regulating credit reporting companies like Equifax, Experian, and Trans Union which has been in effect since 1971. A revised FCRA became effective October 1, 1997. This law protects consumers' rights, such as the right to review and contest information in their credit profiles. It also specifically defines who can access the information in a credit profile and how you are notified of this activity.

 How does divorce affect consumer credit?

A divorce decree does not supersede the original contract with the creditor and does not release you from legal responsibility on any accounts. You must contact each creditor individually and seek their legal binding release of your obligation. Only after that release can your credit history be updated accordingly.

 Should I use one of those companies that promise to help correct my credit?

It's your choice. However, beware of companies that promise to remove accurate information from your credit file. Accurate information cannot be removed from a credit file. There is nothing they can do for you that you cannot do for yourself by contacting the credit reporting agencies directly. Only time will heal a delinquent credit history.