Credit Reports

What is an Investigative Consumer Report and how does it differ from a credit report? As it turns out, there is quite a substantial difference between an investigative consumer report and a credit report.

Your credit report is a collection of data gathered from your creditors, which summarizes your credit history. When you apply for a credit card - your bank, credit card company, or mortgage lender uses your credit report to evaluate the potential risk of lending money to you. Although, the data can be boiled down to a three digit numerical score, it makes no inference about your general reputation or character. You could be a mean scrooge, but as long as you pay your bills on time, your credit report will be spotless.

An Investigative Consumer Report, on the other hand, is a form of credit report that is more like a detailed background check. In addition to covering your general creditworthiness, it also involves the gathering of information on your character, general reputation, personal characteristics, or way of living. The gathering of that information may even include interviews with your neighbors, friends, and associates about your lifestyle, character, and reputation.

Investigative Consumer Report will not include any information about your credit record obtained directly from a creditor, or from you. It is not used, and cannot be used, as part of an application to grant credit. Normally, the use of investigative consumer reports is limited to certain specific uses, such as employment background checks, or insurance application. If anyone chooses to perform an investigative consumer report on you, you will be notified in writing of such an action. If someone requests an investigative consumer report for employment purposes, federal law requires them to obtain permission from you first.

If, as a result of the investigative consumer report, your application for employment is rejected, the employer must give you a copy of the report. If your application for insurance is rejected, you may contact the credit reporting agency for more information; however, the credit reporting agency does not need to reveal the sources of its information.

Federal law regulating investigative consumer reports is strict, and California's law governing background checks and credit checks differs somewhat from other states. If you interested to learn more about privacy rights there are many credible web sites you can check out.

With very few exceptions, one of the first things a potential lender will ask you for when you are apply for a home loan is your permission to run a credit check. If you have some concerns about your credit history, you might want to think about what some people call "no credit check mortgages." There are lenders that specialize in helping people with bad credit get into their own homes and acquire financing at a reasonable interest rate.

Unless you are applying for a VA Home Loan Refinance, pretty much any legitimate lender is going to check your credit. However, your credit score is not the only consideration lenders will look at when you apply for a loan, and you should not think of it as the only determining factor. Some loan products are designed for people with a less than optimum, or sub prime, credit profile. Lenders who specialize in these types of loan products will weigh in other factors when considering your loan application. If you can provide verification of income (through W-2s, pay-stubs, and past years tax returns), and if you can provide personal references and documentation of your ability to meet your financial obligations, such as rent payments or deposit receipts, then you may be able to qualify for one of these types of loans.

Also, the fact that you are already a homeowner will weigh substantially in your favor when you approach a lender to refinance. As long as your Loan to Value Ratio (LTV) is high, the bank will take that into account when determining the risk of lending you money. It is likely that they will also look at the timeliness of the payments you have been making on your existing mortgage.

Your credit score is based on an average of the scores from the three major credit bureaus (TransUnion, Equifax, and Experian), and generally the middle score is the one used to determine your rating. When looking for a no credit check mortgage, shop around to as many lenders as you can and talk to loan officers to see what they recommend to improve your score and overall risk profile. You may not qualify for the same loan that a borrower with excellent credit could acquire, but many lenders will work with you to help you get a mortgage product that works for you.

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