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Improve Your Credit Before Applying for a Loan

If you are thinking of applying for a home mortgage loan, then the time to check your credit report is now. Don't wait until it is on the loan officer’s desk to start thinking of making repairs to your credit rating. First of all, there may be a mistake that is having a negative impact on your credit rating through no fault of your own. Mistakes are relatively simple to have taken off, but it is up to you to find them and to take the steps to have them removed.

Merely pointing out a mistake to the person you are trying to get a loan from will do no good. Until it is taken off your report, they have no other option but to consider it valid, regardless of what you say, or any documents you may present to them proving otherwise. The first step you can take is to pay down any credit cards or outstanding debt obligations you may now have. You don't want to apply for a home mortgage loan while you are loaded up with outstanding debt.

Another step is to check your credit reports. The three major reporting agencies are TransUnion, Experian and Equifax and they all are required to make available, upon request, one free credit report, to any American consumer per year. Some states are not covered by this policy, so check to see if you are in a state that allows this. Mistakes are common so don't be surprised if you find one.

If you do find a mistake, then get together the documentation that you will need to prove that it is a mistake; then you can begin to take the necessary steps to have it corrected. Applying for too many mortgage loans can have a negative impact on your credit rating. One way around this is to shop online and have the mortgage companies bid on your loan, then make one application to only one company.

Another thing to keep in mind is choosing a reputable, well-known lender. Using a finance company may send a signal to other lenders that you are a credit risk, even if you have paid off the loan. Hold off on any major purchases until after the loan is approved. If you have bad credit, it might pay to wait a year to apply for the loan. This will give you time to make repairs on your credit and your score to go up.



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