August 15, 2024
When preparing to buy a house, it’s essential to give yourself plenty of time to improve your FICO scores and ensure a strong history of on-time payments before applying for a mortgage.
However, there are other crucial aspects of credit repair to consider.
To begin a credit repair journey, it helps to understand how credit reporting procedures work. Credit reports, which are compiled by major credit bureaus like Equifax, Experian, and TransUnion, contain comprehensive records of your credit history.
This includes your private data, such as your current and former addresses, Social Security Number, and information on your credit accounts.
There may also be information in your credit file from public records. Do you have a bankruptcy in your past? That will show up on your report along with any foreclosures, and inquiries into your credit report.
FICO scores are numerical indicators of creditworthiness. These scores are set using the information in your credit reports.
Lenders review your FICO scores to determine how much of a risk you are to lend to. These scores can help the lender decide what interest rate to offer you.
Inaccuracies in your credit reports will hurt your chances of being approved for an FHA home loan. You must determine your credit reports don’t contain incorrect personal data, filing errors, duplications, or inaccurate account information.
Any discrepancies should be addressed as soon as possible, and you should not proceed with a loan application if you have an unresolved dispute with a credit agency.
The dispute process often takes longer than anticipated. To begin, request a free copy of your credit report annually from each of the three major credit bureaus. You can do this by using AnnualCreditReport.com.
Review your credit reports for inaccuracies, outdated information, or duplicate content. Be sure to work with all three credit bureaus and the company responsible for any inaccurate data.
You may be required to provide supporting documentation to prove your claim. This documentation should include payment records and account statements.
When you know the contents of your credit reports, you can begin to take steps toward credit repair before your home loan.
- Make on-time payments for at least 12 months before your mortgage application.
- Minimize credit use before filling out a loan application.
- Consider using secured credit cards if you have a limited credit history.
- Consider using a secured credit card if you need to improve FICO scores.
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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