Getting Your Finances In Order

Before you start looking for a home, get a copy of your credit report. According to a recent study, one-third of Americans have enough inaccurate information in their credit files to prevent them from getting a mortgage or other large loan. If the report contains errors, the lender might automatically reject your loan request.

Correcting even the smallest error can take at least two weeks. Correcting bigger mistakes can take months. You may be the victim of credit fraud and not even know it. Professional thieves can open checking and credit accounts in your name without you even knowing it. Credit fraud usually doesn't appear on your credit report until after the debt has gone into collection. Even if the purchases occurred in states you've never even been to, it is your responsibility to contact the credit bureaus, and even the companies trying to collect the debt. Follow up; the error might not get cleared up the first time, and if you've been defrauded once, you're likely to be defrauded again.

Order a copy of your credit report from each of the three major nationwide credit reporting bureaus: Experian/TRW, Equifax, or Trans Union Corp. Each report will cost about $8. If you are turned down for credit, you are entitled to one free copy of your report.

Previous bankruptcies and foreclosures
Bankruptcies and foreclosures can remain on a credit report for seven to 10 years. Some lenders will consider an applicant earlier if he or she has reestablished good credit. The circumstances surrounding the bankruptcy can also influence a lender's decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, the lender probably will be less inclined to be flexible.