How to Check Your Credit Before
Applying For a Mortgage

Question: Can you please tell me, or direct me to the source, of how to request reports from the major reporting agencies. Are they free? -- Richard Waide.

Answer: Yes, by law, everyone is entitled to one free credit report each year from each of the three major credit reporting agencies, which are:

• Equifax Information Services, P.O. Box 740241, Atlanta, Ga. 30374, 800-685-1111, www.equifax.com.
• Experian, P.O. Box 2104, Allen, Texas 75013, 888-397-3642, www.experian.com.
• TransUnion Corp., P.O. Box 390, Springfield, Pa. 19064, 800-916-8800, www.transunion.com.

But if you want to obtain a free credit report from one or all of the big three credit reporting companies, go to AnnualCreditReport.com. Accept no substitute. Visit the site.

A credit report is a sort of fiscal fitness statement of your credit habits. It names your credit accounts, identifies them by type and tracks balances, credit limits, payments, available credit, open-or-closed status and other information that reveals how well or how poorly you pay each account. The report also documents credit requests and notices of liens, judgments and other "derogatory" remarks, remarks from the consumer, and other information.

When you apply for a mortgage or other credit, the creditor takes a look at your credit report, among other documents and data, to determine if you qualify for credit and to determine how much credit it will grant you. Consequently, it's a good idea to keep tabs on your credit report so you can correct any mistakes that could adversely affect your application, and to take steps to improve your credit whenever possible. An unblemished credit report not only gives you fast access to credit, you also pay less in interest than you would if your report contains blemishes.

But beware of "impostor" Web sites that pose as "free credit report" Web sites but which are questionable marketing gimmicks designed to enroll you in credit-report monitoring and other credit services in exchange for granting you your "free" credit report.

Under federal law, official, free access to your credit report is available through a single Web site, AnnualCreditReport.com, by phone (877-322-8228); by mail (Annual Credit Report Service, P.O. Box 105281, Atlanta, Ga. 30348-5281), or by filling out the request form on the Federal Trade Commission's Web site ( www.ftc.gov).

By the way, a credit report is not the same as a credit score, which is a numerical analysis of your creditworthiness at a certain point in time, and it not available under the free report provision. If you are looking for your score, make sure you heed the following advice from foreclosure and workout specialist Bill Ring:

Feedback

While it's true many people are uninformed or misinformed about their credit scores, two things are rarely mentioned.

First, I advise my clients to make sure that the mortgage broker they are using is aware of the existence of different versions of software used for the various scoring systems. Older versions are not as forgiving (read: produce lower scores) as the newest, up-to-date version, and many resellers of credit reports never bother to disclose this to the broker, much less the consumer.

Second, consumers shopping for a home loan who request their own credit scores are not going to be given the same midscore they would be given in a tri-merge credit report produced for a mortgage broker, which is usually lower.

The truth is, our credit-reporting system, while it is better than nothing, is still full of inaccuracies, lacks many operating standards and is in need of a serious overhaul. Bill Ring, The California Consumer Resource Center, Santa Monica.

More feedback

I just bought a home for the fist time this year but it is for my mother to live in and I am paying most of the mortgage. I live in another city and rent a room from someone who works with me.

This individual has a few rental properties and has asked me in the past if I was interested in joining him. I told him I was not because I could not afford it even though most people would consider that they could in my circumstances.

I would not even consider buying a rental property when I do not even own the place where I live. I know that this does not always apply, but that is where I believe the person who wrote from Michigan made their first mistake.

Even though the real estate mania is over and there should be more renters shortly, because just about every one who could possibly buy a home has done so, that only leaves the deadbeats as renters. So if you find you have this problem, then you are going to be forced to carry the payments with no income and in a worst-case scenario, you might find yourself evicted from your lease if you cannot pay your rent.

At least if you buy a home to live in first, you will not have this problem.

Email your comments to rjeditor@dowjones.com.