Many people believe that locating their “dream house” is the first step in the home buying process; however that is far from the truth. The first and most important step is to review your credit report for errors or any potential negative information such as collections, judgments or past due accounts. The three national credit bureaus Equifax, Experian and TransUnion maintain a financial credit report on nearly every American which is used to assess their credit worthiness.
Due to this, mistakes are often made which can have a harmful effect on consumers. Some commons examples include inadvertently transposing the wrong Social Security digits of someone with bad credit and linking that file to you. Other examples include long outdated accounts, accounts not reported and accounts from ex-spouse still linked to your credit report.
Having a bad credit report will cost the average consumer more in interest charges compared to someone with a good credit report.
The federal Fair Credit Report Act (FCRA) was enacted by the US Congress to ensure all Americans have access to their credit reports annually. Unfortunately not many Americans are aware or take advantage of this service. There are many websites that promise free credit reports however the official website is www.annualcreditreport.com. It is a centralized website that provides consumers access to the three nationwide credit bureaus reporting companies – Equifax, Experian and TransUnion.
It is recommended that you check each credit report because they all contain different information. The best thing to do is to stagger the credit reports and perhaps order one credit report from each credit bureau every four months to have the latest updated report.