If you’re seeking a mortgage in Pennsylvania, then you probably already know that the loan you ultimately obtain will depend largely – or entirely – on your credit. Consequently, checking your credit should be the second most important thing that you do when applying for a mortgage in Pennsylvania – the first being to ensure your budget is viable. Even if you think your credit is stellar, there could be mistakes on your report that could affect the mortgage rate you receive. Therefore, a thorough credit checkup should be done before you fill out a mortgage application.
Under the Fair Credit Reporting Act as amended in 2001, every American citizen over the age of 18 is entitled to one free copy of their credit report each year. There is no obligation or any products or services to sign up for in order to receive this report. One report from each of the major credit reporting agencies may be obtained in a 12 month period. This includes Equifax, Experian, and TransUnion.
The only US government authorized website for executing your rights to your annual credit report is http://www.annualcreditreport.com. It is strongly recommended that you obtain your free report from this source, although other companies may be able to provide you with a free report under certain conditions, and with some additional restrictions or requirements.
Other options include paying for a copy of your report, or writing to the credit bureaus directly and requesting your government-authorized once yearly free report.
Once you have your report in hand, you’ll need to verify the information contained in each of the files held by the credit agencies. Examining all three files is an important step because data may vary significantly from one agency to another, and a great deal of information may be missing, incorrect, out of date or worse – fraudulent. If your report contains inaccurate information, you should contact the reporting agency directly and update or dispute it by following the step-by-step instructions on their respective websites.
If you’re applying for a mortgage in Pennsylvania and your credit report is accurate, that still doesn’t mean your credit checkup is complete. If your credit scores are below a certain threshold or you owe certain types of debts, you could end up paying thousands more in interest over the term of your loan. Consider the following courses of action, pending the advice of a professional financial consultant;
*Bring all delinquencies up to date
*Payoff any charged-off balances or collection accounts
*Some delinquencies may qualify for a re-age. Contact your creditor to find out more.
*Remove any unnecessary authorized users
*Close unneeded accounts
*Lower your overall credit utilization by paying down revolving and other balances
*Payoff or resolve tax debts or liens
Using the free credit report you’re entitled to each year, the overall process is really quite simple: examine your report, dispute or correct information when needed, and take steps to improve your general credit profile. Being proactive about your credit can save you thousands of dollars over the life of your mortgage, and in the end can help to get the most money possible to use toward the purchase or refinance of your dream house.
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