FHA Loans and Credit Checks

July 5, 2012

One type of frequently asked question involves credit scores and credit ratings. A good example:

"I had bad credit at one time but I am not sure about my credit score now and want to know if there is any way of finding out if I would be eligible for an FHA loan without applying for the loan and having my credit checked. What should I do?"

Pre-purchase home loan counselors advise their clients to request copies of their credit reports and examine the details carefully.

Potential FHA borrowers can do this in one of several ways-consumers may request a copy of their credit reports from each of the three major credit reporting agencies--Equifax, Experian, and TransUnion.

Another option borrowers have is to make the request via a third party company such as GoFreeCredit. Such websites give borrowers a chance to review their credit data, who has requested their credit information, and a "snapshot" of your credit rating.

It's important to study the credit report for both your credit score. Most lenders require a minimum of at least 620 or higher for an FHA mortgage loan.

Understanding your credit record is important--you should review it to insure there is no erroneous or outdated information in your report. Studying your credit report is also a good way to detect signs that you've been a victim of identity theft-if so, you may have to open a case with the credit agency to fix your record.

Contesting information on a credit report successfully can't be done quickly. It can take months to file the required paperwork, which may include police reports and other details in cases of identity theft. That's why it is best to request your credit information at least a year in advance of applying for an FHA mortgage.

Knowing what is on your credit report is crucial to getting an FHA mortgage loan. Knowing exactly what is in your record goes a long way toward knowing how your loan officer will be able to help you with your home buying needs.