Check Your Credit Report Before Applying For A Mortgage

It is a good idea to check your credit report prior to making any large financial purchase which includes buying a car or applying for a mortgage.

You should do this several months prior to applying for your mortgage which will give you plenty of time to see what is in your credit report and fix or dispute any data on it that you feel is incorrect.

Nowadays, with identity theft and the excessive amount of fraud that is going on, it is probably a good idea to check your credit report more frequently anyway.

There are three major credit reporting agencies. These agencies are the ones that your creditors report the timeliness or lack of payment for any financial accounts that you may have. This includes but is not limited to landlords, credit or store cards and just about any business that offers credit for services rendered like car repair shops.

You are entitled to free credit reports depending on your state laws once every 12 months and also anytime that a financial institution rejects an application for credit from you or your interest rates rise on existing accounts that you have due to information in your credit report. You can also obtain a free credit report anytime that you think that there has been fraudulent activity.

When applying for a mortgage, they look over your credit report very carefully and note anytime that you are late with payments or are delinquent on any payment.They are after all loaning you quite possibly a substantial amount of money with a mortgage.

It is easy enough to challenge any errors that you feel may be on your credit report. It can either be done online or by writing to credit reporting institution that provided the information for your credit report. If you have been denied credit or your interest rate has risen, then your creditor will provide the contact information for the reporting agency that they obtained the information from.

You can fix any detrimental data on your credit report by challenging the offending item or making a notation about why you believe that the claim was not correct. Also by offering to make payments, it makes your credit report appear that you may have had a problem in the past possibly due to some temporary setback like a job loss or an illness.

There are agencies that can help you to repair any credit damage that you may have had from the past. They contact all your creditors and act on your behalf to get the lowest possible settlement and then you end up making one payment a month.

If you have no or little credit record also, that may not necessarily be a good thing.

What a mortgage lender is looking for is a stable record of borrowing money and being able to pay it back in a timely fashion. It might be a good idea to obtain a credit card and use it minimally each month and pay the balance when you get the bill. This will show the mortgage lender that you use credit responsibly and are able to pay on time.

It is also not a good idea to have too many credit cards no matter what the balance on them is. It displays that you do have the potential to charge all those cards to their max and even if you have 5 cards with a total balance of $2000. If you have a credit limit of $10,000 on each one, you have the potential to be $50,000 in debt at any time.

As you can see, there are a number of reasons why you would find it beneficial to check your credit report several months in advance of applying for a mortgage. It gives you time to assess and repair if necessary your credit so the chances of getting a mortgage will be much greater at a much lower interest rate.