Before you apply for that first loan, take some time to review your credit report. You’ll want to look for any mistakes that could be adversely affecting your score and correct them as soon as possible. Many consumers have mistakes in their credit histories that they are not even aware of, it pays to check your credit report regularly. Common mistakes to keep an eye out for are:
• Clerical errors such as the misspelling of your name. This could mean that you have the credit score of someone else.
• An incorrect social security number
• Incorrectly entered payments, including payments that you have made but are not recorded.
• Unreported remedied accounts – sometimes credit agencies neglect to record accounts which have had their delinquencies remedied.
If you notice old accounts that are inactive in your credit report, keep them open. Closing them will shorten your credit history, which will increase your credit score. Having incorrect information in your credit report might just not make it difficult for you to secure a loan, but subject you to higher interest rates as well. A difference of 40 points in your credit score could cost you tens of thousands of dollars in interest over the course of a 30 year loan.
If you find that your credit score is on the low side and might make it difficult for you to secure a loan, at least at decent rates, you might want to consider an investment partner. You’ll be surprised how many people are interested in taking the plunge, but lack the moral support to do so. You might also consider a private loan, as although the interest rates might be on the high side, it could be worth it if you are able to sell the property quickly or refinance later on.
Ethel Wilson is a blogger and researcher for Credit Score Resource.
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