Are you trying to purchase a home or refinance a mortgage? If so, you know that your credit score is one of the main factors that determine what mortgage rates you are eligible for.
One important step to take before you apply for a home loan is to check your credit report. Your score is based on the information in the report. Any negative entries will reduce your score. You might notice, however, that one or more entries in your report are incorrect. How can you fix these errors to raise your score before you submit your application for a mortgage?
Credit Report Errors Are Common
You might think that errors in credit reports are pretty rare. But surprisingly, there is a significant chance at any given time that any given consumer might have an error in their report.
The Consumer Finance Protection Bureau writes, “According to a study conducted by the Federal Trade Commission, one in five people have an error on at least one of their credit reports.”
More than one type of credit report error is possible. Here are a few of the most prevalent ones to be on the lookout for:
- Errors involving identity
- Errors regarding account balance or status
- Duplications of entries
- Entries inserted back into your reports incorrectly after removal
Any of these types of errors could feasibly lead to a decline in your credit score. But that means that if you can remove the mistake, your credit score could also increase.
How to Dispute an Incorrect Entry in Your Credit Report
Read through your credit report carefully—and remember that an error present on one report may not be on another and vice versa. So, you may want to consider looking at your reports from all three of the credit bureaus.
Once you identify one or more errors, what is your next step?
The CFPB writes in the same link, “To get mistakes corrected, you may contact both the credit reporting company and the company that provided the information to the credit reporting company (also known as the “information furnisher”). You may file a dispute not only with the credit reporting company, but also directly with the information furnisher, and include the same supporting documentation.
The CFPB also provides sample letters for this process.
Remember that you may need to reference the same documentation that you include again in the future. For that reason, you should not send the originals. Instead, make copies and send those with your letters.
What Happens Next?
After receiving your letter, a credit reporting company has a limited timeframe to respond. In most cases, this is 30 days.
Once the process is complete, here is what you can expect:
- You will receive a written explanation of the results of the credit reporting company’s investigation.
- If the decision reached was in your favor, you will get a free copy of your corrected credit report.
- The information provider will also have notified the other two bureaus. Assuming they follow through correctly, they will correct their credit reports too, if necessary.
- You can request that the bureau send notices to those who may have seen your incorrect credit report any time in the past half year.
- If the results of the investigation are not in your favor, the information will not be removed from your report. You can, however, ask that a statement be added to your current and future reports mentioning that you disputed the entry. In doing so, you are letting anyone who views your report know that there may be more to the story than what the entry states.
Move into a Home in Washington Now Even Without Perfect Credit
During the mortgage process, we can answer questions you might have about your credit score, credit report, and what you can do to qualify for a competitive home loan now, even if you have negative entries on your report.
Sometimes, following the process recommended above can lead to your score improving and resulting in more competitive loan offers.
But even if you are unsuccessful at removing negative entries from your credit report, you may still be able to move forward with a home purchase.
Here are some loan products that Blue Square Mortgage offers to help customers like you to successfully buy a home:
- FHA mortgages
- VA loans
- Poor credit loans
Ready to find the loan product that is right for you and to get the advice you need to raise your score before you apply for a mortgage? Please call Blue Square Mortgage today at (206) 352-6453. We look forward to working with you.