smartest thing you can do before applying for a loan is to check your own credit
report. If there is bad news on your record, it is definitely best for you to
know first. It gives you the chance to clean up your act before striking out in
the first place. The second reason to check it yourself is to fix the mistakes.
One out of every four consumers has mistakes in their credit report. It can take
weeks to correct a faulty report so take care of it before you involve the lender
and find the home.
Under federal law,
a credit reporting company has a reasonable time to respond to your complaint
(normally 30 days). If the error-ridden report is already in the hands of your
lender, find out which credit reporting company provided the data. If you ask for a copy of the report within
30 days of the loan denial, the company must send you a copy along with the name
of any other lender who has received the same report within the last six months.
If you decide to pull your own report, look to the largest credit reporting company, Experian. If you were denied credit for any reason in the last
60 days, Experian will provide you with a free copy. Their number is 800-682-7654.
Trans Union and Equifax also provide reports. Any company whose report has been
the cause of denied credit owes you a free copy as well.
Always be honest on your applications
about past credit problems. Don't try to sneak anything by or you'll probably be rejected. But keep
it in perspective. If the mark on your report is a couple of late payments on
a credit card or car payment, write the lender an explanation. Perhaps you were on vacation
or lost the payment coupon. The worst case scenario for bad credit is that you will need to spend a year or two cleaning up your act before you buy.
Don't wait until the night before
your lender needs your paperwork to start rummaging through old sock drawers and
shoe boxes for the information he or she needs. Start now. Once you have checked
your own credit report for late or delinquent payments, you are ready to apply for pre-approval.
Here is what you need to find:
Since you are going to need it anyway, you may want
to gather everything else you are going to need for a full loan application.
2 of 9