VA Loans: The Importance of Checking Your Credit
Part of your annual financial checkup should include any and all aspects about your money and you. Is your career path what you expected? Are you making what you want to make or should you ask for a raise or even seek new employment? Are you saving enough for your retirement and if not should you establish a 401(k)? If you already have a 401(k), are you contributing enough or can you sock away even more tax-free savings? And, have you looked at your credit report recently?
Why Does It Matter?
Checking your credit report should be as much a part of your annual review as any other financial aspect yet sometimes it can slip by or perhaps never reviewed until you apply for a VA loan. But credit reports can have mistakes and depending upon your source, nearly one in five can have an error. Such errors can be minor such as a misspelled name or an old address. Still other mistakes can be more serious such as late payments listed on your report that aren't accurate or collection accounts appearing on your report that don't belong to you.
When negative information is listed on your report, your credit scores can be harmed without your knowledge. Most VA lenders require a minimum credit score of 620 in order to qualify for a loan and if your report shows outstanding collection accounts or worse, your VA application may be denied.
Where to Go for Your Credit Report
There are a variety of places to get your credit report. Your own bank may offer to provide you with a copy or a fraud protection firm can send you your most recent report. Still others can let you know when someone accesses your credit file, either from a business considering offering you a credit card or someone who may have stolen your identity.
Fraud protection and credit monitoring services can be a good thing but for the purposes of checking your credit report for accuracy, the three main credit agencies, Equifax, Experian and Transunion have teamed together to provide you with a copy of your credit report for free once per year. You can access this free report at www.annualcreditreport.com.
How to Review Your Credit Report
Once you've received your credit report, what exactly do you look for? Mistakes. Look for negative information on your report that is clearly an error. For example, if your credit card company says that a payment you made six months ago was more than 30 days past the due date but you know different, you need to get this information corrected. What you don't need to correct are things such as current balances and minimum monthly payments to creditors. Why? The information at the credit agencies are typically at least 30 days old, so if you paid off a credit balance but a balance is still showing, it's simply a matter of the credit agency catching up.
Also look for an account that you don't recognize. If you see a credit account that doesn't belong to you it can mean someone else's credit information is simply appearing on your report, or worse, someone has stolen your identity.
How to Fix Mistakes on Your Credit Report
When you see an obvious error, such as a recorded late payment, it's up to you to document the error. Credit reporting agencies only report what's provided to them. For example, if a car payment is shown as being late, get a copy of the statement showing the due date as well as copy of your cancelled check showing the date the payment cleared or if you paid online, provide a copy of your payment confirmation.
You can call the creditor directly by using the phone number listed below the creditor, you can call the credit bureaus alerting them to the mistake or better, you can do both. You'll be asked to fax or email the information to them and if found to be a mistake, the error will be fixed.
If you're already in the process of applying for a VA loan, your lender can help you get mistakes fixed on your behalf. Credit agencies have VA lenders as their clients and solicit their business. Your VA lender can contact these agencies and with copies of your information documenting the error, can have the information corrected within just a few days.
If you haven't looked at your credit report in quite some time, regardless if you're applying for a VA loan today or not, you should get a copy of your report today and make it part of your annual review. Credit agencies are paid to provide businesses with credit histories of consumers and through no fault of their own they can be provided with false information. The only way they'll know if it's wrong is if you tell them.
Grant Moon is the author of a soon-to-be-released guide on VA loans.