Grooming your credit score is a great way to prepare for buying a house. It will help you review your spending habits and detect any errors, so can correct them before mortgage lenders use your scores to estimate the loan terms they will likely offer to you.
How to review each credit report
It is very important that you check your credit reports diligently before the mortgage lender checks them. To check all three reports from Equifax, TransUnion and Experian, place an online order for these and your credit scores. Each report must be thoroughly reviewed for inaccuracies and signs of theft of identity. Anything that is inaccurate or is hurting your credit score should be brought to your notice.
Plan to boost your credit score
Based on the estimated credit score and credit reports, you could follow some suggestions and update your credit score. It would also help to discuss the errors with the credit companies. Here are some tips on what will help and what will not to help boost your credit score will help in boosting your credit scores:
• Finish small loans by paying off as early as possible
• Keep credit card balances low
• Each month, pay your credit card bills and loans on time
• Do not make unnecessary credit inquiries for new credit
• Do not ask a for an increase on current credit limits
• Clean your credit reports of expired negative records (collections, bankruptcy)
• Clean your credit reports of fraudulent records (identity theft records)
What will not help in boosting your credit scores:
• Closure of credit card and loan accounts will lower your credit score
• Delaying payments of credit card bills and loans
• Putting in applications for a number of new credit accounts
• Removal of correct records from credit reports
• Removal of positive expired records from the credit reports
• Completely paying off all collection and bankruptcy accounts.
Requesting changes and corrections
After reviewing the credit reports, one should take action to boost their credit scores as soon as possible. A letter of dispute has to be submitted to the credit bureau for requesting removal of inaccuracies from the credit report.
Next, you need to gather evidence to prove that the credit agency reported the information to your credit report in error. You will need to mail a letter explaining why your credit report needs to be corrected along with any related documentation. Be sure to make copies of the documents that you send and keep the originals for your records. Remember to include in your letter your full name, address, date of birth, and social security number.
Once your documentation has been received, the credit reporting agency has thirty days to review your claim and repair your credit report. Inform the credit agency and avoid further errors by sending them a copy of the letter and documentation that you mailed to the credit reporting agency.
Crimes should be reported to the credit bureau’s identity theft departments to be able to remove a fraudulent entry from your credit reports.
The final step
You will need to allow 30 to 60 days for updates and corrections to show up in your credit reports. Don't apply for a mortgage until you check your reports again to confirm that the changes have been made and your scores adjusted accordingly.
Avoid Future Credit Report Errors
If your credit report shows any outstanding balances that you owe, then it is your responsibility to repay the creditors. However, other errors can occur that some people are not even aware of until the damage has already been done. Some common causes to be aware of are clerical errors, an ex-spouse’s credit troubles are still being tracked back to your name, or you could have been a victim of identity theft.
If you are faced with having to fix your credit report due to bad credit decisions or you were simply a victim of circumstance, there are steps to take to clean up your credit report and help prevent problems in the future.
Monitoring your credit report & score can lead to big savings & more purchasing power.
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