Credit History

WHEN YOU'VE made your monthly home mortgage payment on time for years, you naturally assume that you've built up a good credit history. That credit report or history, in turn, can be crucial in helping you borrow money elsewhere or get a job or even insurance.Yet large numbers of American homeowners are the unsuspecting victims of a little-known but growing trend among certain lenders: Their payment histories are being kept secret, never reported to any credit bureau. Their credit files contain nothing about their home loans, even if they've been gold-plated customers of their mortgage company for years.

YOU MAY need little or no cash for a down payment. And you may not need a credit history, complete with bank account balances and credit cards, that traditional homebuyers typically have to show to get a mortgage.Sounds too good to be true.But as simple as they sound, these are the core concepts of a revolutionary change under way in housing for 1999: Huge national banks and mortgage companies are targeting a heretofore invisible segment of the home-buying market -- moderate- and lower-income people who hold steady jobs, pay their rent on time, but just can't seem to accumulate much spare money after paying for food, the kids, utilities and the like.

The pages of Alison McElhinney's credit history contained a few surprises when she looked at her credit bureau files recently.Her mother's mortgage showed up under McElhinney's name. The Baltimore woman's student loan debt had doubled to$50,000. And among six credit card accounts erroneously listed was one opened in 1972, when she was 6 years old.Two years after passage of the federal Fair Credit Reporting Act, a new study by a national consumer group suggests that serious inaccuracies continue in many credit reports, and that consumers still struggle to get them corrected.

It happens a thousand times a day, millions of times each year.A potential homebuyer -- with hopes of being able to get a great interest rate -- applies for a mortgage and begins down that path toward purchasing a home.With good credit -- no tardy bills, no large debts, few credit cards and a high credit score -- it's likely an applicant could be approved for a loan in as little as 30 minutes.An applicant with a less-than-sterling credit history or maybe no credit history might bomb out especially on their credit score.

NEW YORK -- When it comes to fees, credit cards are getting as loaded as bank accounts. What's surprising is that customers make so few complaints.That doesn't surprise economist Lawrence Ausubel of the University of Maryland. His studies show that you underestimate how much you borrow on your cards. On average, you're carrying more than twice as much debt as you think.Fees will be rising even higher, thanks to a recent Supreme Court decision. Formerly, states could limit the fees charged by any card sold to its citizens.

Two years ago, I married a wonderful man. This is the second marriage for both of us, and I really want this marriage to work.But my husband is financially irresponsible. I think he has some past bills haunting him and may even owe back taxes.I've worked very hard to build up a good credit history, and I would like to help my husband solve his problems. However, every time I bring up this subject, it ends in an argument. I am worried that our credit history will be damaged or, worse yet, that someone will knock on my door and take him away.

How do bankers determine who gets a "thumbs up" or a "thumbs down" for a credit card, mortgage or car loan? Why are some people flooded with credit-card offers while others get turned down?Many lenders use credit scoring to decide who gets a loan and who doesn't. Consumers who amass enough points get the loans; those who don't are rejected.The following test is an example of the scoring system. Add up the points to see how you stack up:* Length of time at address:Fewer than two years . . . add no points.

NEW YORK -- Can your personal credit history predict how well you'll drive a car? Or how carefully you'll take care of your house? A growing number of insurance companies think the answer is yes.Before they'll approve you for homeowners or auto coverage, or decide how much to charge, they'll pull your latest credit report. If they think that you're not financially stable, you might be rejected for coverage or pushed into a high-risk pool -- even if you've never had an auto accident or made a claim on your homeowners insurance.

Q: I am unemployed and have no income of my own. My husband and I were issued VISA cards in each of our own names. All our assets, including our home as well as our savings and checking accounts, are owned jointly. If something were to happen to my husband, would I have a credit history?A: Income and assets have very little to do with a credit history. A credit card, a car loan or a mortgage should show up on your credit history, whereas a checking or savings account and even stocks and bonds probably will not.In order for a joint credit source to appear on a wife's credit history, her name should appear on the loan or credit-card application.

Q: Could you please tell me how to clear up my credit? I have a copy of my Trans Union credit report, and some of the bad stuff on there has been paid off. I keep sending them letters but they still haven't taken it off. What should I do?A: I'd like to be able to help you, but there's nothing that I, or anyone else, can do. You see, a credit report is really a credit VTC history that must include all credit experiences over the past seven years. Bankruptcies stay on your credit history for 10 years.

Theodore Casser has been a loyal Bank of America credit card customer for about 10 years. But the prospect that the bank might start charging him an annual fee because he pays off his balance monthly has the Baltimore software developer ready to sever that relationship. "I take it almost as an insult," says Casser, who hasn't heard yet if he will be among the small percentage of unprofitable Bank of America customers to be charged a $29 to $99 fee starting next year. "I'm happy to take the hit to my credit rating to cancel the card."

As we get ready to say goodbye to 2008, it's worth looking back at the year that was for home buyers, sellers and owners. Frankly, I wouldn't be surprised if this year goes down as one of the worst ever for housing since the Great Depression. Housing values fell by double-digits in many metropolitan areas. Housing starts virtually stopped. Inventories of new and existing homes grew dramatically. Mortgage interest rates remained relatively high, even as the short-term Federal Funds rate plunged to nearly zero by the end of December.

A good credit score matters a lot now if you're in the market for a home loan and don't want a 10 percent interest rate. Lenders are much, much pickier than they were before being hit by the foreclosure wave. Two years ago, a 620 FICO score was enough to get the best mortgage rate, says John Ulzheimer, president of consumer education for Credit.com, a financial services and consumer education firm. Nowadays? The 700s. His top score-improvement suggestion: "Never ever give a lender a reason to say anything bad about you to the credit bureaus."

Fair Isaac Corp. is revising the formula for its widely used FICO credit score for the second time in a year. This time, the company seems to have gotten it right. Last week, the company said it would restore "authorized user accounts" when it calculates the FICO credit score. That's a reversal of a year ago. "Two thumbs up," John Ulzheimer, president of consumer education for Credit.com, says of this latest development. Lenders use credit scores to determine whether to extend credit to you and under what terms.

I've heard from more than a dozen readers who were confused by a recent column on how to clean up your credit history (also known as a credit report) and credit score. So, let's clear the air. First, your credit history also includes personal information, such as your name, Social Security number, current address, how long you've lived at your current address and past addresses. Your credit history is primarily a list of all of the financial activity in your life. It lists all of the credit accounts you have ever opened, and how long they've been opened, including credit cards, a mortgage, home equity loan, student loans, car loans, personal loans (provided that those were reported to the credit-reporting bureaus)

I am a graduate student who will be graduating in May. At that time, I'll be starting a full-time job and looking to purchase a home for the first time. Because of some really stupid choices with credit cards in college, my credit score is pretty low. I'm working hard to pay off all of my debts, but this may take some time. I also have lots of student loans on my report. I'm a little concerned about qualifying for a home loan. Will I automatically be turned down because of my poor credit history, or will I be stuck with a high-interest loan?

Credit repair scam artists will charge you anywhere from $500 to $1,500 or more upfront, and promise you everything from a new Social Security card to perfect credit. What should you do if you have bad credit? Here are 10 tips that are designed to improve your credit history and raise your credit score: Pull a copy of your credit history from AnnualCreditReport.com. Sponsored by the three credit reporting bureaus, Equifax, Experian and TransUnion, AnnualCreditReport.com is the only place you can go to get a truly free copy of your credit history.

Every day, thousands of people type the words "credit repair" into an Internet search engine. Thousands more type in phrases like "bad credit" or "bad credit repair." Figuring out how to repair your credit is on the minds of homebuyers, sellers and owners, each of whom has realized that having stellar credit gives you financial options that simply aren't available to those with low credit scores. Unfortunately, some of the Web sites that come up in a search for "credit repair" can do more harm than good.

Ialways cancel credit cards I've stopped using, even if closing the accounts hurts my credit score by raising my debt-to-credit ratio. Why keep unneeded accounts open and risk identity theft? I always pay my card bills in full. Your e-mail shows many of you carry a balance because you think doing so improves your credit score. It doesn't. My credit score? The last time I checked two years ago it was over 800 (760 or above generally qualifies for the best credit terms). To be sure, monitoring your credit history is important, and improving your credit score can save you thousands of dollars through lower interest rates.

Sometimes homebuyers think they'll be able to get away with making a large purchase just after they've been approved for a mortgage. But charging up a ton of debt on your credit card before you've closed on your new home isn't a smart move. In fact, all that debt could sink your mortgage application and kill your real estate deal. When homebuyers go to get approved for a mortgage, the lender takes a snapshot of their financial life. The lender pulls a copy of the borrower's credit history and credit score, and then looks at bank account statements and tax returns.