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
January 22, 2022 - Here’s a list of general down payment questions related to FHA home loans. In each case, the answer is informed by the FHA Lender’s Handbook, HUD 4000.1 but all borrowers should know that additional lender requirements may also apply.
January 18, 2022 - Despite their promises, nobody can remove accurate data from your credit report that is not outdated. That’s the lure some third-party credit repair companies use to get your money. Did you know there are many things you can do to improve your FICO scores yourself?
January 13, 2022 - If you are new to the home loan process or have never applied for an FHA mortgage before, loan approval may seem a bit mysterious at first. There are three basic stages to the home buying process you should be mindful of: prequalification, pre-approval. and closing.
January 10, 2022 - The FHA Cash-Out Refinance loan provides a way to refinance with money back to the borrower at closing time. It’s a way to cash in on the equity you have built up over time for any purpose acceptable to you and the lender.
January 8, 2022 - There are three separate areas that affect your lender’s decision to approve or deny your home loan application. If you start preparing for your loan in advance and anticipate these three areas, you can help yourself get much closer to loan approval.
