Identify and Fix Credit Report Errors
Things to Do Before Applying for an FHA Loan
When the Federal Housing Administration announced rule changes to help strengthen finances and protect against risk, one of the biggest changes was requiring a minimum FICO score of 580 to qualify for the attractive 3.5 percent down payment on mortgage loans.
Know Your FICO Score
Applicants who fall below the 580 score will have to put down a 10 percent down payment in order to qualify for an FHA mortgage loan. For many applicants hovering just below that threshold, this policy change may serve as a great opportunity to take close look at their credit report and improve it.
The FICO score is actually comprised of your credit scores from the three national credit bureaus--Experian, TransUnion and Equifax. If your FICO score is just below the FHA limit, you should take the proper steps to check your credit report with the three agencies.
How to Check Your Credit Report
There are many ways people can check their credit scores. There are many online resources for people wishing to identify where they stand with lenders. Once you've gotten your report from the three bureaus, carefully examine your credit history for anything out of the ordinary, such as unauthorized loans taken out in your name, incorrect late payment records or anything that seems questionable, no matter how minor you think it is.
While your credit reports and credit score are what lenders use to judge your reliability in paying back loans, errors in your reports can happen. Make sure they aren't hindering you and your life's plans.
Correct Errors as Soon as Possible
The longer you wait to correct your credit history, the more potential damage errors can do. Prevention is key, so if you don't use a credit monitoring service, you should consider one. If you do find any errors, send a letter to the bureau that reported it and clarify with them why you think it is incorrect. Be sure to provide proof and any other documentation that will help your claim.
If you're already in the process of applying for an FHA loan, notify your lender of your dispute with your credit report as well because your credit score indicates your creditworthiness. It never makes sense to suffer at disadvantages that were the result of something you didn't do.
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FHA Loan Articles and Mortgage News
July 26, 2024 - The FHA 203(k) rehabilitation mortgage and its refinance equivalent are tools for buying and renovating a home or remodeling an existing property. This loan can be used to buy a fixer-upper and finance the repairs needed to make the home livable and meet local building codes.
July 25, 2024 - The U.S. Department of Housing and Urban Development issued a proposed new rule in July 2024 that is intended to be a permanent policy regarding the sale of delinquent FHA single-family mortgage loans.
July 23, 2024 - When shopping for a home loan, you need to gather some basic information from multiple lenders to compare the costs, fees, terms, and conditions of the home loan you seek. During this process, you can verify information with each lender you choose.
July 22, 2024 - As we age, the significance of making sound financial decisions grows. Many choose to tap into their home equity in their retirement years, and two options are important to know: FHA reverse mortgages and FHA refinancing.
July 21, 2024 - FHA refinancing is worth considering if you want a government-backed loan insured by the Federal Housing Administration (FHA) that can refinance you out of a conventional adjustable rate mortgage or get you cash back at closing.
