Yesterday, I received a call from a client who had sold their home over 3 years ago as a short sale. They were reaching out because they were interested in purchasing a new home in Idaho. They had made an offer and were in the process of applying for a new loan. The loan officer informed them that they would only qualify for an FHA loan which would require that they carry PMI insurance. The loan officer informed them that they had a foreclosure on their credit report.
I made a call to a mortgage broker to inquire as to whether this was a common occurrence and if it was something that could be fixed. He told me that these mistakes happen all the time, and with credit harder to secure, this was a huge issue in underwriting. He shared with me that there are several options for the consumer if they believe a credit agency has made a mistake.
This mistake can cost you as it can lead to higher interest rates on loans and credit cards. Yes, the task of repairing your credit can be time consuming and frustrating, but the effort can save you thousands of dollars.
Here are some tips that I saw in an article that was recently published on this timely issue.
Get your credit reportsThe first step is to get a copy of your credit report from each of the major credit reporting firms – Experian, TransUnion and Equifax. Consumers are entitled to a free report every 12 months from each of the credit bureaus. You can get copies at www.annualcreditreport.com.
It’s important to review your credit history periodically. For one thing, lenders can make errors when they report client accounts to credit bureaus. And if an identity thief opens an account in your name without your knowledge, that can hurt your credit until you discover what’s happened.
Get your credit reports The first step is to get a copy of your credit report from each of the major credit reporting firms – Experian, TransUnion and Equifax. Consumers are entitled to a free report every 12 months from each of the credit bureaus. You can get copies at www.annualcreditreport.com.
File a dispute If you believe there’s an error in a report, you can submit disputes online at http://www.equifax.com, http://www.experian.com, www.transunion.com. (Link all three of these to their respective websites.) You can also submit the dispute by mail or phone, the address or number should be on your credit report.
The FTC’s study found that four out of five consumers who found erroneous information in their credit report and filed a dispute with the credit bureaus had a correction made to at least one of their credit reports.
Be patient Once a dispute is received, credit bureaus are required to respond within 30 days. The credit bureau will contact the lender that provided the information that is under dispute. At that point, the lender looks into the matter. If a fix is made, the lender must alert all three credit bureaus of the error.
When the investigation is complete, the credit bureau must provide written results and a free copy of your report if the dispute results in a change. This report does not count as your free annual report.
Contact lenders Another option: Reach out to the lender on the account where the error showed up and ask that they update the credit bureaus with correct information.
Avoid credit repair firms The Federal Trade Commission has warned consumers against firms that offer services claiming to improve a person’s credit report for a fee. Such firms can’t do anything that you couldn’t do yourself.
I hope this helps.
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