Check your credit

What to do now

Get copies of your credit reports 

There are three major credit reporting companies – Equifax , Experian , and TransUnion . You can get a free copy of your credit report once per year from all three companies at www.annualcreditreport.com .

Check your reports carefully for errors

Look on your credit reports for any debts or credit cards you don’t recognize.  Also check for disputed items that still show up even though they were resolved in your favor. A late or missed payment isn’t an error if it actually happened.

• Use our credit report checklist to review each report.
• If you find any errors on your reports, file a dispute to get them corrected as soon as possible. Learn how. 

Get one or more of your credit scores

A credit score is a number calculated based on the information in your credit report. You actually have many different credit scores, and there are many ways to get a credit score.

• You may be able to get a credit score for free, or you can buy a score. Learn more about your options for getting a credit score.
• Most mortgage lenders use FICO® scores. Learn more about what a FICO score is.

What to know

Checking your own credit won’t hurt your credit scores

When you check your own credit reports or scores, the request is processed differently than when a lender checks your credit. Checking your own credit won’t hurt your scores.

Credit scores range from 300 to 850

Higher scores represent a better credit history and make you eligible for lower interest rates. 

• As of March 2015, the median FICO score nationwide was 721 – half of consumers with a FICO score had scores above 721, and half had scores below 721.

The score you receive can differ depending on which credit reporting company is used

Most mortgage lenders look at FICO scores from all three companies and use the middle score for deciding what rate to offer you. 

• If you are applying for a mortgage jointly with a co-borrower, lenders typically look at both borrowers’ middle scores and use the lower one to decide the rate and approve the loan.

The rate you are offered on a mortgage can vary quite a bit depending on your credit score

Your credit score is only one factor in a mortgage lender’s decision, but it’s an important one.  

While there are no firm rules about exactly how your credit score affects the interest rates you may be offered for a home loan, in general:

• The best rates go to borrowers with credit scores in the mid- to high-700s or above. These borrowers typically also have the most choices available to them.
• Borrowers with credit scores in the high-600s to the low-700s typically pay somewhat higher rates.
• Borrowers with credit scores in the low- to mid-600s range generally pay the highest rates and have the fewest choices. Borrowers in this range may have trouble qualifying for a loan, depending on the loan type and the specific lender.
• Borrowers with scores below 600 may want to improve their credit before applying for a mortgage. If you need help improving your credit, contact a HUD-approved housing counseling agency.

Explore interest rates for different credit scores to get a sense of how much your credit score matters.

A housing counselor can help you get your credit report and check for errors

A housing counselor can be a good resource throughout the home buying process.  You can find a HUD-approved housing counseling agency online or by calling 1-800-569-4287.

How to avoid pitfalls

Errors on your credit reports can reduce your scores unnecessarily

An error in your credit reports could mean a higher interest rate and less money in your pocket – so it is important to correct any errors well before you apply for a loan. 

• Check your reports carefully – if there are any errors, file a dispute with the credit reporting company as soon as possible. If you are unable to resolve the dispute, you can submit a complaint to the CFPB.

Be wary of companies offering to “fix” your credit score

Be especially wary if they charge an upfront fee – these companies are often scams. Never pay in advance. Don’t believe promises of anyone who says that they can get negative, but correct, information off your credit report. 

• If you need help improving your credit, contact a HUD-approved housing counseling agency online or by calling 1-800-569-4287.

If you don’t have a credit report or score, consult a housing counselor

If you haven’t used credit cards or taken out a loan before, you may not have a credit report. Or if you’ve only had a little bit of credit, your credit file may not contain enough information to calculate a score. A housing counselor can help you figure out what your options are.