Jan 10, 2013
How to Save on Mortgage Payments and Loan Fees
Your credit score is the most important factor in deciding the interest rate and fees paid for your mortgage loan. Following the few basic steps outlined in this article will help you understand and improve your credit scores before applying for your loan, saving you thousands of dollars in fees and mortgage payments.
“Credit scores” rates borrowers creditworthiness based on real time assessment of credit history. Your personal score is the main indicator used by lenders during the loan approval process to assess the likelihood of your on-time payments and set the rate and terms of your loan.
The assessment process usually begins with a review of your credit reports provided by the three major credit reporting agencies: Experian, Equifax, and TransUnion. Consumer’s information including payment history, trade lines and public records (i.e. judgments, bankruptcies, and tax liens), are collected by these agencies from creditors and court records. This information is stored in credit files and provided to qualified creditors/lenders as user friendly credit reports. Each agency using their own methodology calculates credit scores based on the information they have on file about consumer’s credit histories and payment patterns.
Since your score is based on information in your credit files, it is important to make sure that the information is accurately reported by all three agencies. Find out what your credit files are saying about you because information from creditors is added to your credit files without verification.
By Federal law, consumers can challenge inaccuracies and request correction to their credit files. Consumers can and should dispute any information that is inaccurate.
- Order and review copies of your credit reports from each agency.
- Don’t be surprised if the information on your credit file varies from one agency to another.
- Carefully review each report for errors; yes your credit report will most likely have some errors.
- Compare each report with your known accounts, look for inconsistencies and/or inaccurate information, duplicated accounts, closed accounts which are still reporting balances, and open collections that should have been discharged in bankruptcy.
- Make a list and dispute any information you believe to be incorrect.
- Contact the agency reporting the incorrect information.
- Identify and state clearly why the disputed item is incorrect.
- Include copies of documents supporting your claim.
There is no fee for getting disputed information removed! The agencies have 30 days to verify disputed information and respond to your request; otherwise, they must remove the information and it cannot be refilled unless it is verified by your creditors as accurate and complete. If any changes are made to your file you should receive notification and a free updated copy of your credit report.
After cleaning up your credit file recheck your scores if they are still below 740 you still have some work to do. Start by downloading EZ Steps to Improve Credit Scores.