Unfortunately, too many consumers wait until they are actually applying for a major loan before they check their credit. If you are planning to apply for a major loan — especially if you want to apply for a mortgage loan — it’s better if you check your credit first, and then take steps to improve it.
Avoid Unpleasant Surprises
It’s important to check your credit report so that you can avoid unpleasant surprises. About six months before you actually apply for a home mortgage loan, look at your credit report and get a feel for your credit situation.
Are there errors on your credit report? Do you see fraudulent accounts? These are problems that need to be repaired before you apply for your big loan.
Another reason to check your credit report is so that you can get a good idea of where you stand in general. How do lenders see you? This can be a huge deal later on down the road. Look at your credit report now, and get a good idea of whether or not lenders will think that you have too much debt, or that you have missed too many payments.
Once you know how you appear to creditors, it’s time to work on improving your credit before you get to the point of applying for a major loan.
Repair Your Credit
Most of the time, credit repair takes a concerted effort, and a little time. While there are some credit repair companies that can help you move the process along a little bit faster, the truth is that it can take between 60 and 90 days to start to see some improvement. And if you have bigger problems with your credit, repair can take a year or more.
Begin repairing your credit as quickly as you can. In some cases, your credit can be repaired by correcting mistakes on your credit report and having fraudulent accounts closed and removed. This can take some time, but it is usually fairly simple.
For other problem issues with your credit report, you need to take a more active approach. You might need to pay down debt so that your credit utilization and your debt to income ratio are reduced. You might also need to make an effort to pay on time so that you can start improving your payment history — which is the most important factor in determining your credit score.
Even if you “know” that you have good credit, it’s a good idea to check your credit report before you apply for a major loan. Mortgage lenders are quite picky about who they approve, and what terms you will get. Even someone with good financial and credit habits can end up with a lower credit rating due to mistakes and fraudulent accounts.
Double-check your credit situation a few months ahead of time. That way, you will have some time available to you to repair your credit and bump up your score enough to get approved and to perhaps even get the best possible interest rate for your situation.