| VERIFY YOUR CREDIT RECORD |
Verify your Credit Record
It's time to look at your credit records. It's imperative that you put your credit history in order before applying for a mortgage. Verify your Credit Record"Credit is to buying a home what your SAT scores were to getting into college," says Dick Lepre, president of Homeowners.com, an internet-based mortgage broker. "The most important thing is credit. That's where everything starts." That may be a daunting thought if you've had past credit problems. But before you give up your dream of owning a home, take a deep breath. There's still hope.
Obtain a Credit Report
Start by finding out what's in your credit report. The reports deal with personal identification, employment information, payment history, inquiries made by other parties, and various data available to the public. This includes bankruptcies, tax liens and foreclosures.There are three major credit reporting agencies: 1 > Experian (formally TRW), 1 > Trans-Union and 1 > Equifax. You can also get your credit report online. Experian will send you a free report each year; Trans-Union and Equifax charge $8 per copy.
Get a copy of your report from each agency, since the same information does not always find its way to all three. If you are turned down for a loan because of credit problems, the agency that reported your credit history must provide you with a free copy of your credit report upon request.
All mortgage applicants should abide by one simple rule: it is best not to apply for a mortgage until you are certain any errors have been corrected in your credit report. A loan denial could be held against you in subsequent loan applications. Lenders will look for red flags, such as debt, late payments, bankruptcy, repossessions, bills sent to a collection agency, credit inquiries and large credit balances.
Some lenders use a mathematical procedure to analyze your credit. Called credit scoring, this procedure was designed to give lenders an "objective" view of credit histories. It looks at the number of accounts a borrower has, lines of credit, repayment histories, past credit applications, employment, and other factors. At this time, credit scoring is just one piece of your credit evaluation. Lenders are not required to disclose your score.
Review & Correct
Scrutinize each credit report for errors, inconsistencies and red flags. You can fix errors by calling or writing the agencies. You may be required to submit receipts, cancelled checks and other records to support your claim. If there are legitimate problems in your report, don't despair. Even bankruptcy can be overcome if all debts have been satisfied. If negative information remains in your file despite your best efforts to resolve the problems, you can write a 100-word statement of defense. The Fair Credit Reporting Act requires reporting agencies to include such statements in your file. And from here on in, keep a clean slate. Make payments on time and begin clearing old debt. |
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