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
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FHA Loan Articles and Mortgage News
February 18, 2021 - When applying for a mortgage or even a refinance loan, there is no one-size-fits-all solution. There is no universally typical borrower, and no circumstance that applies to every applicant. Each home loan application is different, with different circumstances and conditions.
February 16, 2021 - Borrowers who went into loan forbearance over COVID-19-related financial issues have several options for mortgage loan relief. Others instead wanted to refinance their mortgages into a lower payment or interest rate in order to reduce the financial pressure on their monthly budgets.
February 14, 2021 - Many who have filed bankruptcy in the past and feel ready to return to homeownership want to know how long they must wait before applying again. But what does it take to be approved for an FHA home loan after filing bankruptcy? The key is time.
February 5, 2021 - A One-Time Close construction loan is a way even a first-time home buyer can choose to build a new home instead of buying someone else’s existing property. These mortgages do require higher FICO scores and require more time before move-in day than a typical home purchase loan.
February 3, 2021 - The FHA and HUD announced extended foreclosure relief for borrowers affected by the global coronavirus pandemic, and in any situation where home owners need mortgage relief the scammers begin coming out of the woodwork.
