When applying for a home loan or personal short term loans, having the highest FICO credit score possible helps you get the lowest possible interest rate.a personal loan, having the highest FICO credit score possible helps you get the lowest possible interest rate. Many factors are considered to create each person’s FICO score including available credit, outstanding credit, timeliness of payments, and length of credit among other things. Many of these factors are created through years of credit history and are not easily changed.
However, before applying for a home loan or personal loan, pull a copy of your credit report. You can get a free credit report once a year from each of the three credit bureaus (Experian, Equifax, and TransUnion) at Annual Credit Report. Carefully look through your credit report for any errors; unfortunately, the majority of credit reports do contain errors.
To fix an error on your credit report, send a certified letter to the offending credit reporting agency and identify the mistake; you may even want to include a copy of your credit report with the error circled. Make sure to give your full name and address. Include copies of documentation to prove that the credit report is indeed in error. Under law, the credit reporting agency must respond to your claim within 30 days. If the credit agency agrees that your report is incorrect, they must fix the mistake and notify the other two credit bureaus. In addition, make sure you contact the creditor directly with the same letter and information so they can correct your records.
The simple act of making sure your credit report is correct and cleaning up any errors if it is incorrect can save you a great deal of money in interest when applying for a home loan or a personal loan. Doing so is usually well worth the time it takes.