May 26, 2023
Do you worry about your ability to obtain or use credit because of identity theft, errors in your credit report, or coronavirus-related financial issues that still linger even after the end of the pandemic?
You can protect your credit and work on your credit rating; you don’t have to sit idly by and wonder what’s happening with your FICO scores and credit report.
One of the first steps for many is to use credit monitoring.
This type of service offered by third parties allows you to see changes in your credit report, including activities and scores (over a period of time, not necessarily in real-time) that may affect your ability to get credit in the future.
Credit monitoring is a good way to start because using such a service makes the consumer more aware of how credit works, the day-to-day factors that could affect your scores in the long run, and more.
Some people ignore their credit reports until they have a specific need, but this is not a good strategy for managing your finances ahead of a major loan application.
Credit monitoring may lead to contacting credit reporting agencies to dispute things like erroneous information on your credit report. Identity theft is also a major issue, partly because it can take a long time to clear up.
If you experience identity theft, you will need to open an investigation into your credit report at the three major agencies.
Information for filing disputes with these credit reporting companies includes:
- Equifax www.ai.equifax.com/CreditInvestigation
- Experian www.experian.com/disputes/main.html
- TransUnion www.transunion.com/personal-credit/credit-disputes-alerts-freezes.page
What kind of problems can you unearth by using credit monitoring? There are many:
- Wrong information placed in your credit file
- Someone else’s information in your file
- Outdated information
- Evidence of identity theft
Remember, if you need to dispute anything in your credit report, you likely aren’t ready to apply for a major line of credit yet–it takes time to resolve such issues, and you may find it difficult to get loan approval while a credit report dispute is underway, but not resolved.
You should have any such issues fully resolved before you apply for a home loan for the best results.
Credit scores and credit report information are a big part of FHA home loan approval. That said, there are other factors too. Your patterns of credit use, your debt compared to your monthly income, and other issues which also play a role in home loan approval.
The more you know about the process and what your lender is looking for from a successful home loan applicant, the better your chances are of getting your mortgage approved.