If 2016 is the year you buy your dream home, make an effort to get your ducks in a row, starting with your credit standing. The logical place to start would be at AnnualCreditReport.com where you can pull all three credit reports, free of charge, from TransUnion, Experian and Equifax.
The reports may not contain the same details, and credit scores will vary because each credit bureau uses its own metrics for calculating your score. Access to your credit score is an add-on, fee-based feature. However, this number is a measure of your credit-worthiness, and financing sources rely on this number when reviewing your loan application. A score of 620 is usually the minimum acceptable number for major lenders while the Federal Housing Authority expects a score of at least 580 to approve a loan with 3.5 percent down payment.
Examine the reports thoroughly, paying close attention to all adverse reports. About 5 percent of all credit reports contain an error. If you find one, ask the credit bureau involved to correct the information, but you will have to provide proper documentation to back up your request. An occasional blip on your record for making a late payment may be rectified by calling the reporting company and requesting them to delete the information. This usually works if your credit history is generally free of these blemishes.
The debt-to-credit ratio reflects the extent of your current debt burden. Plan on paying down credit card debts to improve this ratio. As an alternative, ask your card issuer to raise your credit limits. Your debt level will be constant, but your credit utilization number would be lower.