Michaela Phillips, Guaranteed Rate, Inc.

Michaela Phillips,
Guaranteed Rate, Inc.

For those on the path toward homeownership, planning is a must before applying for a mortgage. Your plan should include obtaining a copy of your credit report before applying for a mortgage to ensure that everything looks correct. If you’ve been dutifully chipping away at debt and making on-time payments, you may be surprised to find an error on your credit report. Although credit reporting errors aren’t exactly common, they’re also not as rare as you may imagine. According to Credit Karma, approximately 25 percent of Americans have spotted an error on their credit report. If you run into this problem, you’re not alone. There are steps you can (and should) take to mitigate the errors so you can lock down the best interest rate possible. Here, I share how to handle credit reporting errors before you apply for a mortgage loan:

Contact the credit bureau that created the error
Experian, Equifax, and TransUnion all allow disputes to be made if you notice an error on your credit report. To get the error resolved, contact the credit bureau that produced the error by sending a letter or filing a dispute online.

Not sure what to include in your letter? Visit this site to peruse sample dispute letters.

Consider contacting the furnisher
To cover all your bases, it’s often best to contact the furnisher (i.e.., banks and credit card issuers) in addition to the credit bureau(s). If the furnisher made a mistake in reporting, contacting them first may save you a step. However, if the mistake is identity-related, contacting the bureau will be your best bet.

Check your credit report again in 30 to 45 days
Identifying and correcting credit reporting issues takes a minimum of about 30 to 45 days. If you’ve contacted both the credit bureau(s) and furnisher, quite a bit of investigative work will be involved to track down the source of the problem. Once you’ve done your part by sending letters or contacting the necessary parties, be sure to check your credit report again after at least 30 to 45 days have passed. If the mistakes have been corrected and your score reflects the change, you can feel confident about moving forward with your mortgage application. In some cases, the credit bureau’s investigation won’t yield the results that you’re looking for. If this occurs, contact the credit bureau to request a statement of your dispute to be included in your credit report.

Carefully reviewing your credit report is an essential step when you’re planning to purchase a home. If your score is in good shape, you’ll benefit from the best interest rate available.

By Michaela Phillips. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.443.6292, e-mail michaela.phillips@rate.com or visit michaelaphillips.com. NMLS: 312874.