September 24, 2020
2 MINUTE READ
We’ve all heard stories of identity theft, prompting the need to check your credit regularly. However, many people aren’t aware of what is on their credit and are surprised to learn about discrepancies when shopping for a home loan or refinancing. Getting a mortgage is one of the most significant financial commitments most people will make in their lifetime. It just makes sense to ensure your credit report is correct before beginning the loan application process.
Even if you’re not a victim of identity theft, it’s not uncommon for the credit bureaus to report incorrect information on your credit report. Something as simple as missing or incorrect addresses, payment information, or account balances are common credit report errors. Also, this incorrect information could include accounts opened by other people with similar names or addresses. Relatives with the same first names will often have this problem resulting in children having mortgages on their credit report before they’re old enough to drive. At best, these problems can slow the loan process. At worst, they could result in a higher interest rate or having your request for a loan denied. Clearing up these inconsistencies can save a lot of time and hassle when you start negotiating the terms of your home loan.
A clean credit report filled with on-time payments and accounts in good standing will go a long way toward getting your loan approved. However, your credit score can earn you a lower interest rate because it signals less risk in your application.
Not having your credit pulled leaves you unable to get a truly accurate quote. This can lead to substantial delays and disappointment when shopping for a refinance or home loan. As an example, if you start shopping with an estimated credit score of 700-719, let’s say you receive a quote at 2.86 percent on a 30 year fixed with $2,500 in closing costs. But, what if you pulled your credit while shopping, and you got a better deal as a result of finding that you have a better score than you thought! This can have massive financial implications, and it’s best avoided by pulling a real-time credit score to confirm your quote is 100 percent accurate and correct.