February 9, 2022
There are plenty of third parties who promise to fix your credit for you, for a price. But did you know you can do your own type of credit repair without having to pay or coordinate with anyone else?
You should definitely try working on your own credit before you try to pay someone else to do it for you.
But how is it done?
The first thing to remember is that you need TIME. Don’t assume you can fix your credit scores and loan repayment history while you’re working with your loan officer to get your FHA mortgage application approved.
You will need to start working on your credit far earlier than that, as it takes time for credit reports to notice the work you’re putting in (on-time payments, lowering your credit card balances to well over halfway down, and avoiding new credit in the meantime) and you won’t see the results overnight.
Time is also required if you need to dispute any items in your credit report. Your credit report could have errors (easier to contest and fix but they still require plenty of time), there could be entries in your report that indicate identity theft (you’ll need to file police reports and other documentation, which can take a long time), and you might have outdated information that needs to “fall off” your credit report.
Challenging these credit report errors can be tricky because you have not one, not two, but THREE credit reporting agencies you’ll need to make these corrections on.
They don’t necessarily talk to each other, so it’s a very BAD idea to assume that what is fixed on one credit report ultimately trickles down, so to speak, to the others.
That is not likely to happen. Don’t assume your reports will update at the same time, in the same way, or with the same data. It will be necessary, however annoying, to ensure your credit reports from Experian, Equifax, and TransUnion are all reporting the same accurate information.
When it comes to raising your FICO scores, on-time, every time payments are the best way to begin. You’ll want a minimum of 12 months with no late or missed payments on your record.
Also, try to put as much time between your last credit application and your new home loan application as possible.
Remember, your FHA lender needs to review a few things in your credit reports in order to approve your loan–not just your FICO scores. Your lender will need to see your credit use, your credit history, the record of on-time payments, as well as any other payment or financial responsibility-type documentation in your credit report.
One other thing to keep in mind? Your lender will pull your credit reports more than once during the hone loan process. Your loan officer is free to review your credit for any changes between application time and loan closing. Don’t assume new credit activity (good or bad) won’t be noticed by the lender.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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