Most homebuyers are aware that having good credit is important in the homebuying process. However most don't realize that the pricing on their loan cna fluctuate by easily half a percentage point depending on their average credit score. Think of the compounding effect this has over a 30 year note... Literally a late payment on a credit report adds up to thousands over the life of your loan.
Your best defense is a good offense. Once you understand how credit works, your are less likely to make costly mistakes. It’s to your credit to make sure your credit history is “clean” before visiting a lender’s office. Following these tips could improve your credit rating enough to qualify for the home of your dreams.
It’s a good idea to review your credit report once a year, but it’s especially necessary before you apply for a loan. Order a
report from all three major reporting agencies – Equifax, Experian, and Trans Union Corp. Information (and errors) on one
report may or may not be identical to what appears on another.
Each of the three agencies can provide a copy of your report. The reports are on each individual, and the cost varies from
$0 to $30 per report. Only Experian will supply one copy each year at no cost, but keep in mind that any charge is minimal
compared to how important the report is to your home ownership.
Loan applications always require a summary of your debts. Be sure that your summary lists all your debts. Lenders can tellwhether something has been left out on purpose. Your credit report should verify what you put on your application, not expose
new or damaging information.
Although bankruptcies, judgments, and collections may jeopardize your chances for a loan, other – less serious – blemishes
on your report are still potentially damaging. The number of times payments were late – by 30, 60, and 90 (or more) days – as
well as a listing of creditors and high balances, will appear on your report. If you happen to be 30 days late one time, you may be
okay. But if you’ve been 60 or 90 days late, your lender will probably want an explanation in writing.
When you apply for a mortgage loan, the lender will be more interested in your mortgage history than your department-store
account history. The way you’ve handled similar obligations in the past demonstrates to the lender that your mortgage payment
will be a priority.
If you find mistakes on your credit report, you can resolve the problem with the credit agency. But if incorrect information
comes from a creditor, you’ll need to work with the creditor first. In many cases, writing to the creditor to explain your dispute
may resolve the problem.
If your last name is one used by many people – such as Smith or Jones – or if your name ends with Jr. or Sr., it’s even more
important to check your credit report. People with these names are the ones most likely to have mistakes on their files. Also, be
sure that joint accounts are closed if you are recently divorced. This helps avoid anything from your former spouse’s record
showing up on your report.
e
A fee may be required for your credit report. Contact one of the following:
Equifax Information Service Center
P.O. Box 740241
Atlanta, GA 30374-0241
800/997-2493
www.equifax.com
Experian
P.O. Box 2104
Allen, TX 75013-2104
888/397-3742
www.experian.com
Trans Union Corp.
P.O. Box 390
Springfield, PA 19064-0390
800/888-4213
www.transunion.com