An Innocent Credit Error Can Turn a Mortgage Application into a Nightmare

Let's say you've meticulously built up a good credit report over time. Year after year, you've paid off your bills punctually and in full, and each month you've laboriously gone through your credit report to ensure that all the information contained in it is error free. Now, armed with a great credit score, you're finally ready to apply for a mortgage. You're really excited – after all, your lifelong dream of owning your own home is about to come true!

In such a situation, how would you feel if you realized that your credit score has suddenly taken a nosedive? You'd be shocked out of your wits, right? Well, this is exactly what happened to a really good friend of mine!

With the closing date on his house purchase a little more than a month away, my friend was told that his normally excellent score had fallen below 740 – the minimum score required for obtaining a mortgage at the best interest rates. After getting over the initial shock, my friend scrambled to determine the cause behind the decline in his credit score. After making a few inquiries, he was further surprised to discover that the perpetrator was – you'll never believe this – an unpaid phone bill!

Of course, this was more of an oversight error on his part than willful default. His cell phone provider had sent his account to a collection agency after being just more than a month late. Normally, creditors of good repute make genuine efforts to contact their debtors before taking this step – collections are meant – only for those people who don't want to, or for some reason are unable to pay their debts. That certainly wasn't the case here.

My friend honestly didn't know that he had missed a payment and this is something that can happen to anyone. He learned the hard way that when a person cancels his account, some phone companies stop automatically billing their credit card and e-mailing them the outstanding charges. Thanks to this simple credit error, his credit score plunged by nearly 80 points overnight.

Needless to say, what should have been a smooth and effortless mortgage application turned into a nightmare. An epic battle with the phone company ensued. After repeated phone calls and a lot of negotiation, the organization finally agreed to change its rating from "unpaid collection" to a 30-day late rating. Once this was done, he had to make additional frantic phone calls to ensure that the correction was reported to the credit bureaus before the closing date of his house purchase.

In short, an innocent mistake could have potentially cost my friend thousands of dollars in extra interest. This is not something that my friend has faced alone – it regularly happens to mortgage applicants across the country. In such circumstances, those who can afford huge down payments can certainly get a mortgage from a lender who is not very concerned about their credit scores. But such individuals nevertheless have to pay a much higher interest rate.

For my friend, it was a crazy lesson (at a most inopportune time!) as to how a simple error can ruin a perfectly good credit score, and consequently a person's home-owning dreams. If you're someone who's planning to apply for a mortgage in the near future, take extra care that you don't end up making such credit mistakes.

In order to avoid credit score drama ensuing from such simple errors, you should take care of the following:

1. Record your call (in accordance with state law) whenever you argue with a creditor about their mistake.
2. If your credit card number changes, immediately notify the companies that bill you automatically – this will ensure that you don't miss any payments.
3. Whenever you move to a new place, make sure all your mail is forwarded to your new address.
4. Before applying for any major credit purchase, check your score and credit report at least three months before the closing date.

A simple credit mistake can ruin a great credit score; at the same time, a simple phone call can give you access to $50,000 – $250,000 worth of unsecured business credit, at 0% interest! Our team at Fund&Grow can help any individual or business with good credit receive this amount over the course of our 12-month program, with no back-end fees. So what are you waiting for? Call us at (800) 996-0270 to learn more about this today!