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are a few questions you need to ask your lender. Most banks and credit unions want to help you, but some are unintentionally, (I hope) damaging your credit. FIRST: "When you pull my credit report, will you tell the credit bureau the purpose or reason for the inquiry?" Any answer other then YES and you should start to worry. (This question should also be asked before a car dealer pulls your report) Fair Isaac (FICO) says that 10% of your score is based on inquiries. If the credit grantor is not telling the credit bureau why you are applying, FICO can not score your credit file correctly. Go to another institution! _ _ _ SECOND: "Will you report my account to the credit bureaus?" YES, is the answer you want to hear. There are three national repositories, Experian, TransUnion and Equifax. Most local banks and credit unions in Central Illinois report their accounts to Experian If they say NO and you plan on paying your account on time (as agreed), get up and go to another lender. FICO says that 75% of the credit score is based on how you pay, what you owe and types of credit you have. If your creditor does not report your good payments, 40 to 60 points are not being added to your score. _ _ _ The next question should be asked if you are applying for or already have a revolving account, line of credit or home equity line of credit. THIRD: "Do you report, to the credit bureaus, the Line of Credit or Credit Limit?" Yes, should be the answer. FICO compares the Balance on your account to your Line or Credit Limit. If the creditor does not report the Credit Line or Credit Limit, FICO uses the highest balance as the Line of Credit. The more you owe, over 40% of the Line of Credit, the more points FICO deducts from your score. |
FORTH:
"Do you use Credit Scores to accept or reject applications?" There is no right or wrong answer here. Not all banks and credit unions, use credit scores. Some, still use the time tested system called the "Three Cs: "Character, Capacity and Collateral, to make a decision. It is just nice to know if they will make the decision based on you or if they will use a mathematical formula. _ _ _ This next question should be asked, only if they use a credit score to make the decision or if they use a score to determine the interest rate. Yes, some banks and credit unions use the credit score to decide what interest rate they will charge you. FIFTH: "Have you ever attended a class or seminar explaining credit scores?" If the answer is NO, leave, and go somewhere else! Really, do you want a loan officer who doesn't understand credit scores, making a decision on your loan, based on a credit score? _ _ _ The last question you may wish to ask is: SIXTH: "Do you get your reports locally or do you get them from a credit bureau, out of state?" If your bank or credit union answered YES to this and the other questions, they are helping your credit report to accurately reflect your credit score and they are probably pulling their reports through us. KCB Information Services is the only local full service Credit Bureau in Central Illinois. We have been providing credit reports to financial institutions, other businesses, land lords, municipalities and employers credit since 1928. We offer programs and classes on credit reports, credit scores and I D Theft, for service clubs, employers and financial institutions. We can review your credit report and, if possible, we can tell you how you can increase your credit score. Call us today: 309-696-1890 Money Smart Week classes on credit reports are free. |