July 2, 2020

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FHA Home Loan Credit Checklist

FHA Home Loan Credit Checklist

There’s more than one kind of checklist that can help you in the FHA home loan process. There’s an overall mortgage checklist that helps people prepare for closing, but what about in the planning stages when you’re trying to review your credit to insure you are as credit-worthy as possible?

Making a checklist specifically to review and prepare your credit is a very good idea, and you can get started with the following steps below.

Making an FHA Home Loan Credit Checklist

There are three very important areas to keep in mind when making a credit checklist; past credit performance, future credit activity, and the possibility of identity theft and/or outdated information on your credit report. Don’t overlook any of these areas, and be sure to develop a strategy for handling each one.

Your FHA loan credit checklist should include the following:

  • Pulling free copies of your credit reports from the three major credit reporting agencies
  • Reviewing your credit reports carefully for evidence of identity theft
  • Reviewing your credit reports for late/missed payments
  • Reviewing the reports for erroneous information or details that should have “fallen off” your report
  • Planning ahead to apply for your new loan with 12 months of on-time payments on all financial obligations
  • Avoiding new lines of credit in the 12 months leading up to your application

Free Copies Of Your Credit Reports

All consumers are entitled to a free copy of their credit report, so it’s very important to request this as far in advance of your home loan as possible. Try requesting your free report a year in advance, but remember to request another report approximately six months before you want to apply for the loan.

Reviewing Your Credit Reports

You should carefully review the credit reports for evidence of identity theft and erroneous information. Correcting this, or requesting corrections due to information that is out of date, can take more time than you realize. It’s best to start working on your reports a year in advance just in case you need to file identity theft claims, police reports associated with such claims, etc.

The time between your initial filing of a correction or complaint about your credit report and resolution of that report could be several months; don’t assume it will be a fast and easy process, or that your mortgage loan will not be affected by such issues just because you have disputed them.

FHA loan rules, lender standards, state law, and federal requirements may all have a say in how such issues are worked out.

The 12 Months Leading Up To Your FHA Home Loan Application

Insure that you have a 100% on-time payment record on all financial obligations in the year leading up to your loan application. That means the 12 months prior to your application, rather than the calendar year leading up to the paperwork.

It is also strongly advised that borrowers avoid opening new lines of credit in the 12 months leading up to the credit application, but also DURING the home loan approval process. Don’t open new lines of credit while the loan officer is processing your loan-it can and often does affect the outcome of the application for a major line of credit. Your lender may (and often will) run another check of your credit activity at some point during the loan approval process, but before closing time.

Joe Wallace - Staff Writer

By Joe Wallace

January 10, 2018

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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About FHANewsBlog.com
FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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