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Double-check Your Credit Before Applying for a Refinance Loan

With the current credit crunch not anticipated to ease on the consumer level until mid 2010, it's even more important to pay attention to your credit scores. Even if you are applying for a FHA loan, having a better credit score will help increase your chances of qualifying for the loan. Your credit score, or your FICO score, ranges from the worst possible score of a 300 to a perfect 850, as determined by a variety of factors including your payment history, type of credit you have and how much you owe on each account.

Check your credit report for accuracy.
It's recommended to check your credit at least twice a year. You can get your credit report for free once a year at annualcreditreport.com. But the best way to keep watch over your credit is to subscribe to a credit monitoring service. Most major credit card carriers have a monitoring service. These services don't cost very much, typically around $15 per month. But, it's worth it because the credit monitoring service will not only be a way to regularly check your credit for accuracy, but they send out alerts anytime anything is reported on your credit (e.g., a credit inquiry or an account going into collections).

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Finance a new home or get help buying a foreclosed property with an affordable mortgage from FHA Home Loan Services.

Loan Modification Agreement
FHA Home Purchase Loans
First Time Homebuyer FHA Loans
Teacher Next Door Loans
CHFA Loans
FHA Streamline Refinance

Refinance and Save Money Now!
FHA Mortgage Rates dropped below conforming rates in 2008, but with the economy and inflation concerns, interest rates will likely increase soon. Refinance today and get a fixed rate guarantee for thirty years.

FHA Home Refinance
FHA Streamline
Cash Out Loans with FHA
Secure FHA Loans


You should check your credit and dispute any inaccuracies before you even consider shopping for a loan. Inaccuracies happen, and they have the same derogatory consequences as anything you’ve done to affect your credit scores like missing a payment or allowing an account to go to collections.

Improve your FICO credit scores.
Once you've checked your credit for accuracy, the next thing to do is to come up with a game plan to improve your scores. These tips can help you avoid the mistake of inadvertently lowering your scores and help raise your scores:

  • Pay your bills on time.
    Since your payment history makes up 35 percent of your credit score, failing to make the minimum payment within 30 days of the due date could send your score plummeting, says Craig Watts, a spokesperson for Fair Isaac.

    For example you've never missed a payment and have a credit score in the high 700s or low 800s. If you were to miss the 30-day grace period, your score could drop by 100 points or more.

  • Keep your credit card balances down.
    Maxing out your credit cards or pushing your account to its limit is another surefire way to bring down that FICO score, says Watts. Experts say that consumers should aim to keep the balance on their credit card accounts no higher than 35 percent of their credit line.
  • Closing credit accounts can hurt your credit.
    Many people are under the mistaken impression that closing credit accounts will help their credit scores. Since part of your score is based on the length of time certain lines of credit have been open, closing out that 10-year old credit card could take a bite out of your credit score. "It's negative because it's taking away a reference to a positive credit history," says Steven Katz, a spokesperson for TransUnion, one of the country's three major credit-reporting agencies.
  • Applying for too much credit can hurt your scores.
    Department stores will usually offer you a 10% or 15% discount if you apply for their credit card. The problem is, opening multiple lines of credit in short period of time is considered abnormal behavior by credit agencies, according to Fair Isaac, which can indicate that you might be more of a credit risk.
  • Unpaid library fines, parking tickets and traffic fines can ruin your scores.
    More often nowadays, municipal governments are turning outstanding fines over to collection agencies, which could drop your credit scores by 100 points or more. Pay the fines before they get turned over to a collection agency, because even if you pay the collection agency, the derogatory information will stay on your credit report for 7 years.
  • Do your loan shopping within a focused period of time.
    According to myFico.com, FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
  • Re-establish your credit if you've had trouble in the past.
    One of the quickest ways to re-establish credit after a bankruptcy or a spell of financial difficulty is to open a secured credit card account. With these accounts, your credit line equals the amount of money you put in the savings account that the financial institution holds as collateral against your line of credit. Pay this account promptly and keep the account open. After about six months, you should start seeing improvements in your credit scores if you keep your balances below 35% as well as keeping your payments prompt.


15-Year FHA Rates | 30-Year FHA Rates | 5-Year ARM Rates
All FHA mortgage products are provided by FHA Home Loan Services, which may arrange loans with third party providers. FHA Home Loan Services is national mortgage lender. Not everyone will qualify for a government insured mortgage. FHA Home Loan Services cannot guarantee all loans will be made or whether all loan applications will be approved by the investing bank.
This is not a commitment for a FHA house loan or an advertisement for credit as defined by paragraph 226.24 of regulation Z.
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