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Thinking about buying a home in a year or two? Check your credit now.

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ARE YOU THINKING OF BUYING A HOME IN A YEAR OR TWO? CHECK YOUR CREDIT NOW.

Many of us are aware of the pitfalls of credit. Unfortunately for some, they only become aware of their credit issues when they go to apply for a loan. Don't let this happen to you. Your credit and what's reported regarding it has become as much of a factor in obtaining a loan as your job, income and ability to repay. It will also stay with you for years.

The old saying that "an ounce of prevention is worth a pound of cure" sure applies here. With that in mind, my personal recommendations are as follows:

-Get a CURRENT COPY OF YOUR CREDIT REPORT. (I recommend TrueCredit.com who provides one report with information from all three major credit bureaus).

-The major credit bureaus; Experian, Equifax and TransUnion often have different information and you should have a copy of all three reports to compare. (You may be eligible for one free report each year from each company- check with the companies for details).

-Analyze and compare the reports with your own personal records. This is ESSENTIAL. Make sure that each account listed is under the proper name and account number, and that your payment history has been recorded correctly.

-Pay off any valid judgements and or collections and request a letter of satisfaction stating said debt has been paid.

-Immediately notify credit bureau of discrepancies as well as the vendor in question. Be prepared to provide a written statement of the suspected error, date, amount as well as any other pertinent information.

-Order back statements when necessary. Even the best bookeepers occasionally misplace a record. Get and keep your information for preceding two years for all credit accounts, single or joint.

-Invest in some form of secure storage for this and other personal information.

When I recommended a year or two to get credit issues in order, I meant it literally. Fixing credit can take awhile but it can be done. Don't give up.

Whether through your own mistakes or the result of someone else's, it is essential that you make a plan to meet your credit goals. There are many non-profit credit counseling agencies that can be very helpful in getting credit issues identified and resolved.

Taking the time to find out your credit information now can save you endless hours of headache later.

Posted by Bend Oregon REALTOR ® Kelli Fronabarger on 03/28/2007 11:54 AM

Comments (14)

credit, oregon real estate, central oregon real estate, buying a home, buyer checklist

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14 Comments on Thinking about buying a home in a year or two? Check your credit now.

MAR

2007

Great advice, as a Realtor I deal with a lot of people who do not know what their credit looks like. Many of them are sometimes suprised by what they find in their credit once they get it run by the mortgage broker, and have to delay buying becuase of this.

You hit the nail on the head Kelli.

Great post. I'm flagging this.

I work with too many Realtors who protect their client until an offer is made, or borrowers who wait until the last moment. At that point it's to late. I'm forced to do nothing more then place the loan. Give me 60-90 days and I can often perform a minor miracle. I'm sure Ben would agree.

We really need to ask what is in our clients best interests! If a Realtor would not even show a home or take a listing prior to having their mortgage professional pull the credit and give a few recommendations all parties would be better served.

If a buyer would seek the advise of a trusted mortgage professional early they can potentially save thousands of dollars over the life of a loan.

I find that a lot of clients think they will get dinged by checking their credit early, even though it is an incredibly good idea to clean up credit reporting errors, etc. One woman was bragging about her good credit and found a black mark on a health club membership she thought she'd cleaned up long ago. Good post!

Carmen-My experience too. I had a client that had an agreement with her ex-husband at the time of their divorce. When it came down to getting her financing, she was very disappointed to find he had not kept his end of the deal and that her credit had been affected adversely.

Ben- Thanks. I think buyers should get this crucial information as soon as they begin thinking about buying a home.

Larry- I totally agree. We can accomplish much more working together : ) Thanks for the flag : )

Irene- I may be wrong but I do not think a client checking their own credit receives any kind of "ding". I do think it is important for everyone to do, not only for purpose of buying a home but also to protect against idenity theft. Thanks for your comment : )

Hi Kelli: Thanks for the fast response back to my post. I did not think anyone would get a ding on their credit but given the reluctance of my clients to do a check on their credit ahead of time, I think that might be what keeps them from doing this. One young woman I worked with back in December kept refusing to cooperate with any lenders I sent her to because she felt her credit score would decline. When they contacted her, she would tell them that she already knew what she could afford. Eventually, she found a property she wanted, only to find out from the lender that she could only afford a condo, not the house she was hoping to get. It was very sad.

Good advise. I have dealt with a few young couples that could have benefited from this advise. Many people are aware of their general situation but not with the specifics. Thanks, I'm going to start promoting this advise regularly.

When a lender pulls a credit report it dings a score by about 5 points. This is only a temporary thing and it will usually not affect a loan.

A buyer can have their credit report sent to them for free once a yaer, but it doesn't come with a score unless they pay for it. I've also found taht their score could be different then what the lenders when they pull it.

The main drawback to a Buyer pulling their own credit is that they might try to fix things that actually make their scores worse. Kind of like going online to diagnosis yourself. If they pay off a 5 year old collection it becomes a recent collection payoff and the 7 year clock starts all over again. Adverse reporting has significant damage during the 1st 12 months and diminishes after that. A 30 day late last month often has more impact on a score then a repo 3 years ago.

Great Post Kelli, especially with the subprime issues now. It's smart to check your credit now and maintain or take necessary steps to improve credit rating before applying for mortgage loan.

Irene- I really don't know if a client pulling their own has any effect. Maybe someone will make a comment and tell us both. That's too bad about your client, I had the same thing happen with one of mine. : (

George- Thank you and thanks for your comment : )

Larry-I think it is helpful for any consumer to know what is in their credit report. I agree that consumers should consult with a credit counselor or mortgage lender to decide how to best reach their credit goals. Thanks for your comments : )

Christopher- I completely agree. I went to refinance once and found a loan for 72,000 that had been paid off for 3 years still showing as an open account. Never know what you'll find till you look. Thanks for stopping by : )

Great post Kelli, well put and informative.

Kelli--this is some stellar advice. Many people do not know what is on their credit reports. Never too early to check this out.

This is really great advice. Many buyers think that they can find the home they want and then worry about financing. They are truly surprised by the health, or lack of health, of their credit score.

MAR

2007

Timothy- Thank you and thanks for your comment : )

Valerie- After finding that 72,000 mistake on mine, I am a believer. Thanks for stopping by : )

Patrick- Thank you. We tend to get the cart ahead of the horse sometimes and wind up vastly disappointed. Thanks for your comment : )

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