Check your credit report first if you are considering buying a home.

Why should you check your credit report?  Your credit score can determine your interest rate.  The interest rate determines what you pay over the life of the loan for your home.  For example, a 30 year fixed mortgage for $250,000 with 10% down and 4.5% interest will cost you about $552,000 over the life of the loan.  The same home loan with a 5.5%  interest rate will cost you an additional $60,000!  At 6.5% interest you will pay over $650,ooo over the life of the loan.  The 2% interest increase will cost you an extra $100,000!

So what can you do to get the lowest interest rate? Get your free credit report from Equifax, Experian and Trans Union.   Your mortgage lender will look at your credit scores when making its decision to loan you the money.  Your credit scores are based on the financial history in your credit reports. So, the first step you should take in buying a home is to pull your credit reports before your you even talk to your realtor. 

Under federal law, the Fair Credit Reporting Act (FCRA), consumers are allowed to request their free credit report from consumer reporting agencies one time every twelve months.  In other words, you can request your credit report for free from credit bureaus, such as Equifax, Experian and Trans Union.  The three nationwide consumer reporting agencies are required by the FCRA to provide a centralized source for consumers to request their free credit report.  Consumers have the right to request their free credit reports by mail, online or on the telephone.

We recommend you request your report by mail.  You can download the request from HERE.  Complete the form and mail it to: Annual credit Report Request Service, PO Box 105281, Atlanta GA 30348-5281.  When you request your report online you may have to agree to arbitration and give up your right to a jury trial!  What’s the big deal about arbitration?  Under the FCRA, you have the right to file a lawsuit if a credit reporting agency breaks the law!  You also have the right to a jury trial and attorneys’ fees if you win.  When you agree to arbitration you give up these rights – so order your report through the mail. 

Make sure you request the credit bureaus to hide the first five digits of your Social Security number to help protect you from identity theft.  You should receive your reports in the mail in a couple of weeks.  If you find any errors on your reports then you should dispute the errors in writing to the credit bureau reporting the incorrect info.  You should request your reports at least six months before you plan on purchasing a new home so you can have plenty of time to dispute the credit report errors. 

In addition to reviewing your credit reports, you should purchase your credit scores.  Under federal law you do not have a right to a free credit score so you will have to pay about $10.00 to purchase your credit score.  The price tag is small when compared to the benefit of seeing your scores – remember your score determines your interest rate!  The higher your credit score is the lower your interest rate will be.  A FICO score over 760 should give you a low and competitive interest rate with lenders.  

Have you requested your free credit reports?  Have you found credit report errors?  Have you disputed the credit report errors to Equifax, Experian or Trans Union?  If you have disputed errors on your credit reports to the consumer reporting agencies and the bureaus failed to perform a reasonable investigation and verified inaccurate information then you may be entitled to money damages and attorneys’ fees.  Contact Fair Credit Reporting Act attorney Micah Adkins 24/7 at 1-800-263-9091 for a free credit report review. 

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