Check Your Credit Report Before Applying For A Mortgage Loan |
|
Before granting any kind of credit, lenders will always want to examine the risk of not getting their money back and for this they check your credit report to be aware of your current financial position. Your financial habits are well documented in your credit report and the lenders are able to assess your creditworthiness by checking your credit report. It is, therefore, imperative that before applying for a mortgage loan you should check your credit report, as this will give you an idea of where you stand. Credit grantors, as a matter of routine, provide information to the credit reporting agencies about how people have paid back bills and other credit obligations and then provide that information to those who extend credit. This information will enlighten the lenders about how you will discharge your obligations after signing the contract for repaying the loan. As nearly 50% of all credit report contain errors significant enough for an individual to be denied a loan, it is essential that you should check your credit report before applying for a mortgage loan so that if there are any errors, you can have them corrected. You should order and get your credit reports from all three credit reporting agencies and ensure that they are accurate. Your credit score which can be obtained from your credit report is an indicator of your ability to repay your loans and is increasingly used by lenders to base their decisions regarding granting of loans. This is the only reason that lenders check your credit report before approving any type of loan. If you have been routinely paying your bills late, your credit score will be low and lenders will either reject your loan application altogether or insist on a very large down payment or high interest rate to lower their risk. If you find any errors in your credit report at the time when you are checking your credit report, you should complete the Research Request Form that is sent along with your Credit Profile, and give details of the information you believe is incorrect and send it by certified mail after including any document that might support your claim. The credit bureau has to correct any mistakes in your report and it must also include your side of the argument, if there are unsettled disputes over certain accounts. If there are no errors and you do have a questionable credit history, you should start repaying outstanding balances on time to re-establish an acceptable record. You are entitled to a free report if you apply within 60 days of being adversely affected by information in your report and you can get a free report every twelve months if you certify that 1) you are unemployed and plan to seek employment within 60 days, 2) you are on welfare or 3) your report is inaccurate due to fraud. Some states require the three major credit bureaus to provide consumers with one free credit report per year, by law. You can check your credit report once in a year to know about your credit standing. Whenever lenders or someone else check your credit report, it appears as an inquiry in your file. Inquiries can be hard or soft. When lenders look at your report to see what kind of credit risk you pose, it is a hard inquiry but this will do no harm if you get the mortgage, being in good shape. Soft inquiries are those, which are made by you in a bunch at one time showing your desperation or your intention to make a run on the credit system. Your report might reveal a cluster of hard inquiries, if you are shopping rates for a mortgage. If you do this in a concentrated period of time, there will be no harm done. You can ask your lender, when you are shopping around, if he is going to make a hard inquiry. When you request a copy of your credit report, a soft inquiry will show up but it does not stay on your credit report. You should, however, check your credit report for hard inquiries. Before you apply for a mortgage loan, you should check your credit report and eliminate errors and build your credit so that you can obtain the mortgage that you desire. |
