When applying for a mortgage, your credit report can make or break your chances of getting an approval and a favorable interest rate.
Mortgage lenders use a tri-merge report, along with other types of data, as the basis for evaluating your creditworthiness. This report aggregates data from three consumer credit reporting agencies, producing a 3-in-1 packet of information that, unless you understand what you’re looking at, might cause you some confusion.
What Is a Tri-Merge Credit Report?
This term refers to a combined report that incorporates data from the three recognized consumer credit reporting agencies: TransUnion, Equifax and Experian. Your tri-merge report is simply each of the three agencies’ reports combined into one packet of information.
It is important to note that you will not receive a tri-merge credit score, as each of the three reporting agencies uses its own scoring system. Your credit score, at least for the purpose of a home loan, is based on a proprietary calculation that considers the data derived from all three individual reports.
How Does Your Credit Report Affect Your Mortgage Application?
Your mortgage lender will consider several metrics when determining if you qualify for a mortgage, and if so, how much the company is willing to lend you.
One of those factors is your FICO score. FICO stands for Fair Isaac Corporation, the company who developed this rating system. Your score — which can range from 300 to 850 — is based on your debt, your payment history and other relevant factors that assess your creditworthiness.
In addition to your FICO score, your mortgage lender will consider the amount of your monthly debt payments as well as your income. As for your credit data, the underwriter will also carefully analyze your history for making timely payments.
What Is the Best Way to Get Your Credit Report?
You can request your information individually from Experian, Equifax and Transunion. According to federal law, you can obtain all three reports every 12 months at no cost.
You can get your tri-merge from the free annual credit report, which is the only federally acknowledged site. Don’t be confused by the many companies that advertise this free service, but really want to sign you up for a monitoring or similar paid services.
You can pull your credit reports whenever you want to without risk of harming your score; but remember you have to pay if you wish to review your tri-merge more than once per year.
Another way to review your report is to obtain a copy from your mortgage lender. In Orem and throughout northern Utah, Intercap Lending helps Utah home buyers navigate the potentially confusing process of applying and qualifying for a home loan. Contact us today to get your credit report and qualification process started.