“This might get uncomfortable” are a string of words one should run from. The unfortunate part about hearing them, well… more than likely you don’t have a choice but to sit back and endure. Do you remember the first time you met your in-laws? Remember the anxiety and that uncomfortable feeling as if you were going to be peeled back, layer by layer, kind of like an onion. All the while, your spouse is just sitting there smiling, as if they were enjoying your agony!

Well, that experience is a lot like preparing your credit for a home loan! The fact of the matter is, your history will be looked-up, your blemishes will be called out and unless you are willing to be open and honest, your results can be downright frustrating and more importantly, costly.

That free credit monitoring service might not be your best course of action

If you’re not one of those that regularly check your credit, then it’s time to swing into action and make the commitment. But before you subscribe to some “free” credit monitoring service, read below for a few great ways to help you prepare your credit for a home loan.

Education with Experian!   

The three main credit repositories are TransUnion, Equifax, and Experian. These companies compile credit data on borrowers and, typically, lenders request credit histories from one or all three when evaluating a credit application. These three credit agencies also work together in sponsoring a consumer website called www.annualcreditreport.com which provides consumers with a free copy of their credit report from each of the three bureaus. Visiting www.annualcreditreport.com is a great first step when preparing your credit for a home purchase, as it’s best to avoid any surprises when you complete your first home loan application.

Sherlock Holmes, is that you?

When reviewing your credit report, look for any mistakes or inaccuracies. Mistakes can be anything from someone else’s data listed on your report to the presence of a collection account that doesn’t belong to you. These are red flags that need to be addressed immediately and if this is your reality, double and triple check for other problems because chances are there might be some additional issues. It’s no secret that credit agencies make mistakes. Do your due diligence and ensure your report is a true reflection of your credit history. Read below for a little trick on how to best go about fixing any of the mistakes on your credit report.

Pick me! Pick Me!

When working directly with any of the three credit agencies, remember you’re working with a very large corporate bureaucracy. You are one person in a database that contains information on hundreds of millions of consumers. Let’s say there is a late car payment showing up on your credit report, but you have the bank statement showing the payment wasn’t late at all, and there’s a debit from the loan company on the very first day of the month. You made the payment on time and you can prove it. Now, all you have to do is send off your documentation to the credit bureau and wait. Well, if the car loan company disagrees with you, they have 30 days in which to prove their case. And, if they provide any documentation, it’s placed in your file. Stalemate! Yes, you can file a dispute but that’s not going to get your credit mistake fixed. You can see where all of this is going—yes, you can get mistakes fixed by working directly with the credit bureau, but at times it can be very frustrating and time consuming. But, if you happen to be applying for a mortgage, there’s an easier way to get these errors fixed!

Now for our little trick… Most mortgage lenders have business relationships with credit reporting agencies. These agencies even hire customer service and sales representatives to solicit a mortgage company’s credit business. Now, say you go ahead and apply for a mortgage and the mortgage company pulls a credit report during processing and sees that very same late car payment. Instead of taking on Goliath yourself, you have the expertise and advice of a trusted ally, your mortgage lender. Most mortgage lenders will help you submit your documentation and tell you who to send it to and, generally speaking, this can expedite the process. Once the mistakes are corrected, your loan application can then be submitted for underwriting, your final stop in the loan process before pre-closing and closing.

What’s that Nike slogan again?

No one really likes evaluating their credit, unless they are Bill Gates after a good Windows launch. And no one really likes meeting the in-laws unless, well… you’re Bill Gates after a good Windows launch. Yet an up to date, accurate credit report is necessary to ensure you move down the loan approval process with the proper tools and resources you need to get you into your dream home as quickly as possible.

*Please note all pricing, percentages and fees are subject to change and are based on personal circumstances. The use of hypothetical statements are meant to illustrate possible outcomes and are not intended to be assurance of qualifying for a loan, nor a statement of facts.