When considering a major purchase on credit, such as a home loan/refinance, or an automobile, the first step is knowing what your credit report says and what it means. Many people are unfamiliar with reading a credit report, and the effects of poor credit on major purchases. Don't let it become detrimental to your financial health; know your options.

There are three major credit reporting agencies that compile credit information on individuals. Any credit grantor--including your mortgage lender--will obtain your credit history from one or more of these sources to help determine the level of risk they are taking in lending you money. Each of the three reporting agencies' reports may differ slightly from one another, so it is best to get a copy from each agency.

You can obtain records from these national credit repositories--and get a free credit report from each of the agencies--once a year.

1) Equifax Credit Information Services, Inc., PO Box 740241, Atlanta, GA 30374     1-800-685-1111     www.equifax.com

2) Experian, PO Box 949, Allen, TX 75013    1-888-397-3742    www.experian.com

3) Trans Union National Disclosure Center, PO Box 97328, Jackson, MS 39288    1-800-916-8800    www.tuc.com

Correcting Errors

If you believe your report contains errors, contact the agency that issued it and tell them you wish to change or dispute information on your report. The best way to contact the agencies is in writing and by registered mail, with a return receipt requested. That way, you will be able to verify that you filed a timely dispute, and assign some accountability to the agency.

Under terms of the Fair Credit Reporting Act (FCRA), an agency must investigate disputed items within thirty days, and they must provide you with a written report of their findings within five days of completion of their investigation. They also may provide a copy of your credit report if it has changed due to your dispute. Once a dispute is settles, keep copies of all correspondence and payment record to prove the outcome of the dispute.

Taking Control of Your Finances--It Starts With a Budget

While some people end up with poor credit through no fault of their own, others are just not sure how to keep on top of their finances. Money ends up slipping through our fingers, and cash often disappears without our even knowing where it was spent. A written budget that you follow closely can help you bring your spending more in line with your income.

Trim Expenses

Taking time to understand your cash flow and eliminating unnecessary expenditures can lead to greater control of your money, improved creditworthiness, and the ability to reach your financial goals (whether home ownership, owning a car, or just spending less on finance charges overall). Once you've identified how much you need to cover your necessary expenses, take a look at some of your "extras"--dining out, entertainment, etc.--and see if you can find some of the extra cash that you've been "losing" each month.

You can also try these strategies to give your finances a boost:

• Pay off your highest interest debt first, including loan balances, credit cards, and lines of credit. Be sure you are making at least the monthly minimum payments on all of your other bills each month.
• Don't "max out." Drawing up to the limits of your available credit can send up a "red flag" to lenders. 
• Determine your most important upcoming expenditures (buying a new home/car, college costs, paying off credit cards, for example) and how much you expect them to cost. Then determine how much you can set aside each month to reach that goal. If possible, use a direct deposit program to put the money away automatically from each check.
• Consider refinancing if you are already a homeowner. With today's historically low interest rates, you may be able to reduce your monthly mortgage payments. Wells Fargo Home Mortgage can help tailor a program with flexible guidelines to fit most credit profiles. Click on the link, or call 1-800-632-4968 to speak with a Home Mortgage Consultant

Remember--the benefits of the NEA Home Financing Program extend to parents and adult children of NEA Members.

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © Wells Fargo Bank, N.A. All Rights Reserved. Equal Housing Lender.