Unit 1: Do You Want to Buy a Home?

Lesson 3: Your credit report

When you apply for a mortgage loan, you must list all your long-term debts and the monthly payments you make.In order to verify (double-check) that this information is correct, the lender will order a credit report on you and on all co-borrowers. The credit report confirms your present and former places of residence (where you have lived), your job history, and your credit history. It shows how much money you owe and how long you have owed this amount. It also shows the type of loan and your repayment plan. This information helps the lender decide if you will be able to repay a mortgage loan.

You can request your own credit history from a credit reporting agency. The names of the credit reporting agencies in your area can be found in the Yellow Pages of the telephone book. Some credit reporting agencies will provide you with a free report. Others will charge a small fee. You should check your credit report to make sure that it is accurate, and clear up any errors before you get ready to buy a house.

If you don’t have credit cards and have never taken out a loan from a bank or business, you can still put together a credit history. You can create your own report showing that you pay your rent, telephone, car insurance, medical, and utility bills on time each month. For example, you can collect records of canceled rent and utility bill checks and make copies of monthly bills that do not have late charges. This is called a nontraditional credit history.

This lesson will help you learn to read a credit report and to practice the math skills you need to keep track of your total monthly debt payments.

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