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If you don’t know the contents of your credit report, you aren’t ready for a home loan. But subscribing to a credit monitoring service is just the first step--knowing what options to choose can be an important step in getting better prepared for your mortgage loan application.

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Credit Monitoring Before Your Home Loan

October 14, 2020

Credit Monitoring Before Your Home Loan
A lot of what you get in terms of credit advice involves monitoring your credit. If you don’t know the contents of your credit report, you aren’t ready for a home loan. But subscribing to a credit monitoring service is just the first step--knowing what options to choose can be an important step in getting better prepared for your mortgage loan application.

A lot of what you’ll read in terms of advice about credit monitoring includes mention of the fact that the free services you may be entitled to from one company or another may not be enough to stay fully informed about your credit and that can be a problem in the context of buying a new home. Why?

Don’t Get Sidelined by Credit Report Issues

You will invest thousands of dollars to get into your dream home but credit report issues can trip you up along the way. If your credit monitoring isn’t complete enough or you don’t pay enough attention to your credit reports in the year leading up to your loan application, you could end up having all of that planning and saving jeopardized.

One important feature to consider when reviewing the credit monitoring options open to you? The ability to set up fraud alerts that will give you early warning about potential identity theft issues that could affect your credit score.

The Consumer Financial Protection Bureau (CFPB) says such alerts require that creditors, “who check your credit report to take steps to verify your identity before opening a new account, issuing an additional card, or increasing the credit limit on an existing account based on a consumer’s request.”

And according to CFPB, when a consumer places a fraud alert on one credit report “ at one of the nationwide credit reporting companies, it must notify the others.” These alerts can help prevent nasty surprises later on, especially the closer you get to loan application time.

Fraud Alert Options

You can choose from an initial fraud alert and an extended fraud alert. Military members have an additional option--something called the active duty alert. Active duty alerts carry similar requirements to the other fraud alerts mentioned here--making sure the person requesting new credit is the actual consumer.

These active duty alerts last for 12 months and have the added benefit of having your name removed from certain pre-screened credit offers and insurance for as long as 24 months.
The fraud alert is a powerful tool you can use to get better prepared for your loan application but you will need to start as early as possible. Monitor your credit for at least 12 months before applying for your home loan--the same amount of time you will use to plan and save for your mortgage.

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