Before you hunt for a real estate agent, before you step into one open house, before you skim the newspaper's real estate ads, check your credit history.
A poor credit history can mean higher loan rates and delays. An error by a bank or reporting company can prevent you from getting a loan, even if you can claim -- without blushing -- that you've paid every bill on time. And you won't know whether the big three credit reporting companies hold you in good standing until you've checked out their reports. Mistakes are common. They are easy to correct, but they must be spotted to be fixed.
Checking your record
If you've had a less-than-stellar financial past, you'll need a copy of your report to see if late payments were noted. Although untimely debt repayments don't vanish from your credit report for seven years, lenders will be more receptive if you can show that you've paid your bills on time for at least two years.
If blemishes remain or your financial woes are recent, you'll need to explain them to a lender in writing. Lenders recognize legitimate reasons for credit problems, such as divorce, unemployment or illness. They will work with you, if you explain your situation.
To get a copy of your credit history, contact one of the three reporting agencies . Reports cost about $8 each from Equifax ( 685-1111), Experian ( 397-3742) and Trans Union ( 916-8800).
When you receive your report, carefully check that all information is correct. Don't skip over details such as Social Security numbers, addresses and name spellings; errors can link you to someone else's records.
If you do spot an error, send letters to the credit reporting companies. Law requires them to check the accuracy of their information and respond to your complaint within a reasonable time, usually 30 days.
Corrections to your credit report may take several additional weeks to appear. Once your report is clean, then start house-hunting.
When you do find the house you want, you'll be way ahead of other buyers clamoring to buy the same great property. You can march quickly and confidently into your mortgage broker's office and know that your credit report will not delay or prevent you from getting a loan.