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First Time Home Buyers: Improve Your Credit With Credit Monitoring

January 10, 2024

First Time Home Buyers: Improve Your Credit With Credit Monitoring

The COVID-19 pandemic created economic uncertainty for many current and future homeowners. And ever since the pandemic ended, financial troubles have continued thanks to inflation, possible recession, and other issues.

Many borrowers may have experienced financial setbacks in the aftermath of the coronavirus outbreak in America. Many working to recover from financial problems discover there’s a lot of credit repair and related efforts American consumers must explore to get back on track financially.

Protecting your credit is more important than ever–do you know what can hurt your FICO scores? Actively monitoring your credit is an important option–there are services that keep track of your credit report and learn about what affects your scores.

It may be tempting to use free credit monitoring offers but financial advisors recommend comparing features on free offers versus subscription-based services.

You may find that paying a small fee gets you much better options and features for managing your credit.

Why can your credit score change? Is it really necessary to track your credit? Those who need to apply for home loans or other large lines of credit soon learn that new information may be added to your credit file at any time, and not all of that information is 100% correct depending on circumstances.

You could find credit reporting information in your report that isn’t yours, there may be new credit issues listed on your report that isn’t fully accurate, and you may also be a victim of identity theft. Credit monitoring will help identify such problems with your credit report.

There are some issues that hurt your credit that don’t seem as obvious at first. If you have reviewed your credit report and still aren’t sure why your FICO scores are lower than expected, check your credit card balances. 

And it’s not just the inaccuracies you’ll need to worry about. Borrowers who are carrying balances that are too high will find that is a major factor in low credit scores or lower-than-expected FICO scores.

And what about debts that aren’t your direct responsibility? Have you co-signed on a debt? In cases where the primary borrower is delinquent or late on payments, this can affect your credit scores, too.

A lender will compare your financial obligations versus your monthly income since this is crucial for home loan approval. Why? The lender needs to confirm you are actually able to realistically afford your new home loan or refinance.

If your credit score dropped during the pandemic, you should review your reports, file a dispute with each of the three credit reporting agencies (Equifax, Experian, TransUnion) immediately and start the process of clearing up your credit.

Remember that disputing credit entries only works for errors, inaccuracies, identity theft, etc. Accurate negative credit information cannot be removed from your report. You should also consider the fact that your credit reports won’t all update at once. The sooner and longer you work on your credit in the meantime, the better.

Bruce Reichstein - FHA News Author

By Bruce Reichstein

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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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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