March 29, 2023
If you are not monitoring your credit ahead of a credit application, especially a big one like an FHA mortgage or FHA refinance loan, you likely are not ready to apply for that credit.
You want to know what’s in your credit reports along with your FICO scores, and you need to review the accuracy of your credit report before the lender sees it.
Some believe this can be done by pulling annual credit reports. That snapshot of your credit picture isn’t necessarily what your loan officer will be reviewing at loan application time.
The lender will see the most current data available to them, and it’s not wise to leave things to chance when applying for a home loan.
Credit Monitoring Can Help
Credit monitoring is an important tool for the consumer. To use credit monitoring properly, your data should include information on the three major credit reporting agencies.What do these companies report about you? You’ll want data from:
It is best to set up automatic alerts in an ongoing credit monitoring program that can notify you about any changes in those credit reports.
Don’t rely on the scores alone to tell you what kind of credit you have. There are other things to pay attention to. You’ll want to look for errors, outdated information, even identity theft reported in your credit history. FICO scores are not the only data your lender needs to approve or deny your FHA mortgage.
Credit Monitoring Is Important
Pulling an annual credit report is a great way to start monitoring your credit, but you won’t want to rely on that information alone.
Active monitoring is your best option. Annual credit reports may be helpful but they are not the correct tool you need to avoid errors staying on your report, identity theft, or other credit-report-related issues that could hinder you when it is time to apply for your FHA mortgage.
Credit monitoring should include fraud alerts you can place on your credit report. A victim or potential victim of identity theft can use such alerts to notify potential creditors to go the extra mile in confirming the identity of the applicant.
Should You Pay For Credit Monitoring Extras?
Depending on which company you choose, there may be additional subscriber features (for an extra fee) such as identity fraud insurance. These are optional and before spending extra money on these features, research them and compare them to similar options. Are they worth the expense?
In some cases, they might be, but in others, you may be better off saving your cash.
Know before you commit, and remember that you won’t need the extras just to keep track of your basic credit report data.