Ask the Egghead: When should I investigate my credit report?

QUESTION: I expect to be ready to buy a house a year from now. What should I do regarding my credit?

Answer: It’s never too early to begin researching your credit report. It has a huge impact on your entire financial life, not just your plans for home buying. Your credit rating indicates how reliable you are at paying your bills. Unfortunately, the credit bureaus regularly make mistakes that can sabotage your ability of obtaining as mortgage. So it pays to research your credit several months before you begin shopping for a home.

Your credit score is crucial to your ability to buy a home. Scores are a three-digit number, usually between 300 on the low end and 850 on the high end. Generally you need a score of 620 to qualify for a conventional loan. A score of 750 or higher will net you a lower interest rate.

Here’s where to get a free copy of your credit report, which you can request once per year:

Lots of other websites offer “free” credit reports, but they will twist your arm into buying additional unnecessary services. Avoid those headaches, and stick with Annual Credit Report.

Once you receive your credit report, if you’re like most Americans, you’ll probably find at least one inaccuracy that can negatively impact your credit score. Typically, you’ll find these mistakes: credit accounts which are not yours, inaccurate reports of late payments, and all sorts of errors. You’ll need to follow up with each of the major credit bureaus — Equifax, TransUnion and Experian — to get these errors corrected so they won’t appear when your mortgage lender is qualifying you.

Don’t fall for the advertisements that offer to quickly repair your credit score. These scammers can’t do anything for you that you can’t do yourself. So the fees they charge you are totally worthless.

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