Check Your Credit Before Home Shopping

Check Your Credit Before Home Shopping

If you are looking to buy a home, your lender or creditor will look at your credit report to see if you qualify.  Whether or not they allow you to borrow the money needed to buy that home will be based on what they see on your credit report.

The three main credit bureaus are required to give you a free copy of your credit report each year, so take advantage of this and get a copy of your report before you start shopping for a home.  These reports will not include your credit score, but will provide you with the other information provided to lenders who request your information.  Information on your credit report with each credit bureau might be slightly different, so it is good to check each at some point in the year.

Next, review your report to see if there are any inaccuracies.  Make sure each account listed is correct.  If there are any errors on your report, you will need to contact the credit bureau.  Good items can stay on your credit report indefinitely, but most negative items can only be there for 7 years.  Chapter 7 bankruptcies can stay on your credit report for 10 years, and unpaid tax liens can remain for up to 15 years.  If you find a negative item has remained on your credit report longer than the designated time, make sure you report that to the bureau as well.  If you have any problems with one credit report, make sure to check your credit reports with the other two bureaus to see if they have the same inaccurate information.

There is no legal way to remove accurate information.  Any company or individual who promises to do so for a fee is probably scamming you.  The best way to fix bad credit is to focus on building good credit.  While negative items can remain for seven years or more, they will have less impact on your credit score as time goes on.  By practicing good credit habits in the future, you will be able to show that the problems in your past do not truly reflect your current financial situation.

Once you have actively taken steps to improve your credit, you will find that you will qualify for better loans.  Of course it is important to continue using your credit positively, so in order to qualify for that next mortgage, keep your credit in good shape.