One of the most stressful parts of home building can be the financing. When you buy an existing home or a home through a large-scale builder, there are few unknowns. In those cases, financing can be just a matter of researching interest rates, filling out an application, gathering a few documents, and waiting for the paperwork to be filed.
When you build a custom home the process can be more daunting. And when you act as an owner/builder on your construction project, you add another level of complexity.
Before you start talking to banks and shopping for mortgages, get a clear idea of what your financials look like. That way you can make an realistic assessment of what you can afford and also get preliminary feedback from professionals that will be useful in the financing process.
One of the major factors in determining your loan qualifications is your credit score.
To be honest, I think the whole credit score industry is a scam. Companies collect information about you and reveal it freely — to everyone but you. Often the information is erroneous, but you only have the option—if you jump through all the hoops—to file an official dispute of the incorrect items. And the credit bureaus will include you dispute—in tiny text under the glaring negative item. You can’t have the bad info removed.
But I digress. The fact is, your lender will look at your score. So you should look at it first. You need to know if you credit score is high enough.
In my research, I found a site that offers a truly free, no-strings-attached credit report service. With Annual Credit Report you can request a credit file disclosure once per year. (Yes, you can only see your own credit eport once per year. Other people have more access that you do.)
Free Credit Report offers credit reports from all three major credit reporting services: Experian, Equifax, and TransUnion. It’s important to see all three, since any of them may be used by your lending institution in qualifying you for your mortgage.
I have two major complaints about Annual Credit Report. And one of them is a deal-breaker:
- The system is tedious. It took hours to get all six reports (three for my husband, three for me). I had to go through pages of documentation. Even then, when filling out the form to get my own Experian credit report, I failed the security questions! Apparently they know more about me than I do.
- The reports are very helpful—once you get them—but they don’t include your credit score. You have all the yeas and nays. But no score. Each of the credit bureaus holds that back—from you—until you pay them.
Our credit reports look good, with only two exceptions:
- We have one 30-day-late payment on one credit card last August. That happened because we moved that month and while most of the mail was forwarded appropriately, one or two deliveries got stuck in the mailbox at the old house. We found it about six weeks later when we went to pick up a few things that were left behind.
- We have a tax lien from the state of Utah for $171. I’m more than a little perturbed about this one. The state told us we owned them $171. We told them we didn’t. We sent them documentation. We sent multiple letters by courier. They never responded with anything but, “Hey, you owe us money. Pay now or we take your first born.” Finally, we paid the stupid money we didn’t owe. Within a few weeks, they paid the money back—plus a couple thousand dollars more—and sent us a letter stating the lien had been removed. I guess they just didn’t manage to inform the credit bureaus of that. Now, you can imagine that I have typed up a scathing rant about how the tax system is a big racket.
Other than those two choice moments of grief, everything is pristine. We have decades of good credit. We have no debt with the exception of two credit cards—that we use to pay all our expenses (for rebates and frequent flier miles) and pay off in full every month—and a co-sign on our college daughter’s auto loan (which has a small payment that we never pay).
To get my actual credit scores, I’m going to look for a good, free service that includes the credit score. I know there is fine print involved with each one. But at least I’ll have the scores I need. Once I’ve been through the process, I’ll let you know how the credit scores look and what the process was like. Hopefully I’ll have a good recommendation.
[Update: Check out my review of free credit score sources.]