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.
Credit Scores for FHA Loans
SEE YOUR CREDIT SCORES From All 3 Bureaus
Do you know what's on your credit report?
Learn what your score means.
FHA Loan Articles and Mortgage News
September 9, 2024 - The journey to homeownership involves many steps. Getting a home loan is just one of them, but it’s one of the most important. Some borrowers wait to find a lender, choosing to start the search while looking for a house to buy.
September 8, 2024 - The excitement of finding and making an offer on your dream home can become disappointing if the seller declines your offer. It’s a common issue regardless of how hot or cold the housing market may be at the time.
September 7, 2024 - Buying residential real estate can be overwhelming, and filled with uncertainties and stress. You can make this process easier by taking the time to understand the strategies and tactics involved that can raise your chances of a successful purchase.
September 6, 2024 - FHA One-Time Close Construction loans and FHA 203(k) Rehabilitation mortgages are quite different from existing construction mortgages. Buying an existing home means dealing with the potential challenges of that property, bu require extensive work on the house isn't always needed.
September 5, 2024 - When you apply for an FHA mortgage, lenders evaluate your credit reports and scores to decide on approving your loan application. An applicant's credit history paints a picture for the lender who needs to know your level of financial responsibility.
