It’s generally advised for borrowers to check their credit reports a year ahead of time before applying for a home loan. One of the reasons for the early start has to do with the amount of time it could take to dispute items on your report; outdated information, errors, evidence of stolen identity, etc.
But when you are pulling your credit report, what should you be looking for? There are plenty of items you should compile a credit report checklist and include in that list.
Check The Basics Before Applying For Your FHA Mortgage Or Refinance Loan
The first thing to do when pulling your credit report is to make sure all of your vital information is accurate. Your name should be correctly spelled, your Social Security Number should be accurate, your home address should be the most current one, etc.
Some will notice that a change in marital status may have taken a while to be reflected on the report; this may be important in certain community property states where borrowers in a legal marriage (or other arrangement recognized by the state) have certain requirements which must be met when applying for credit.
That’s not to say that having “single” on your credit report when you are not will end your chances at an FHA mortgage, but it’s a detail to be aware of.
Your Credit Report And Your Credit Balances: Check The Numbers
Are the balances listed on your credit report accurate? If not, how inaccurate are they? Your lender will need to review your credit balances as part of the FHA home loan approval process, it’s best to err on the side of caution if the numbers are substantially different on the report than in real life.
The percentage of your credit limit you carry may be a factor in determining your creditworthiness; reducing the balances is important, but so is having the correct amounts listed in your credit report.
A few dollars of difference won’t make or break your home loan application but if the balances are reported significantly higher, it may be time to act.
Credit Reports And Your Employment History
Here is another area to check for accuracy since the lender will also need to verify you’ve been employed for two years, that the income from such employment is stable and reliable, and that the income may continue for the foreseeable future.
Those with shorter work histories may have a vested interest in making sure what is available is listed accurately for best results.