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Monitor credit report before applying for mortgage

First time home buyers looking for a mortgage to fulfill their dream of homeownership may be in for a surprise when lenders fetch their credit report.

With recent data breaches at Equifax, large e-commerce merchants, e-mail providers and many others there's constant threat of hackers gaining access to our digital identity. They can potentially masquerade our profile to make fraudulent transactions online and offline. Missing payments on these fraudulent transactions can significantly lower your credit score and thus have far reaching consequences on your dream of homeownership.

It is imperative to constantly protect our online identity and credit profile, especially so for mortgage seekers. So how do you go about identity theft protection? Consumer Financial Protection Bureau has created a valuable page on this, which we highly recommend you check out: Identity theft protection following the Equifax data breach. To summarize, some signs of identity theft to watch out for include:

  • Accounts on your credit reports that you didn’t open.
  • Incorrect personal information on your credit reports.
  • Credit inquiries from companies you’ve never contacted.
  • Wrong amounts showing on your accounts in your credit reports.
  • Money missing from your bank account.
  • Bills that you used to get are no longer being delivered to you.

Also, there are options available to consumers to proactively monitor credit report, including using credit alerting services, which generate alerts whenever someone attempts to obtain credit using your identity. Credit Alerting services are offered by each of the three major credit bureaus: Experian, Equifax and TransUnion. You may also consider placing a Credit Freeze on your account at each of the three major credit bureaus.Visit Federal Trade Commission (FTC)  Frequently Asked Questions resource for information on how you can place and lift a Credit Freeze. Placing a Credit Freeze will block anyone attempting to access your credit profile from each of the the credit bureaus unless the Credit Freeze is lifted. Lifting a credit freeze will require a secure PIN, thereby protecting your identity.

Signs of identity theft: unknown accounts on credit reports; incorrect personal information on credit reports; credit inquiries from unknown companies; wrong amounts showing on your accounts in credit report; missing bills/money. Click To Tweet

One excerpt from FTC FAQs to note is regarding the difference between a credit freeze and a fraud alert:

“A credit freeze locks down your credit. A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.”

To underscore, owning a home is a long standing dream of many Millennials. To make that dream a reality, accessible and affordable credit is often the key. An intentional and proactive approach for monitoring credit is therefore essential to ensure you get access to the mortgage and fulfill that dream.

For more insights on mortgage credit for buying your dream home, connect with Stem Lending team.

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