How to Fix Credit Errors Before You Apply for a Mortgage

Applying for a mortgage is a big step – especially in Billings, MT’s competitive housing market – and your credit report plays a crucial role in that process. Before you approach lenders, it’s vital to review your credit reports and resolve any errors that could drag down your credit score. Your credit score helps determine whether you’ll be approved for a home loan and what interest rate you’ll pay. Unresolved credit report issues can lead to a lower score, which can result in higher mortgage rates or even loan denial, costing you serious money over the life of your loan. The good news is that by checking your credit early and fixing mistakes, you can improve your homebuying odds and potentially save thousands in interest.

Why Checking Your Credit Early Matters

Check your credit well in advance of applying for a mortgage – ideally, several months before. Lenders typically examine credit reports from all three major credit bureaus (Equifax, Experian, and TransUnion) when evaluating a mortgage application. If there are errors (for example, an account mistakenly reported as delinquent or not even yours), your score could be unfairly lowered. Even a small score drop can raise your interest rate or trigger extra scrutiny during approval. For instance, a mistakenly low score might mean a higher rate, translating to thousands of dollars in additional interest over the life of your loan.

By reviewing your credit reports early, you give yourself time to identify and correct any issues before a lender pulls your credit. This proactive approach helps you avoid last-minute surprises that could delay your loan or make it more expensive. Remember that changes to your credit (like corrections to errors or paying down debts) don’t boost your score overnight – it can take a month or more for updates to be reflected. In fact, experts advise starting to improve your credit at least 3–6 months before you plan to apply for a mortgage. Starting early ensures that, by the time you’re ready to prepare for a home loan in Billings, Montana, your credit report will be in the best possible shape.

Get Your Free Credit Reports (Equifax, Experian, TransUnion)

To fix credit errors, you first need to see what’s on your reports. U.S. law entitles you to one free credit report every 12 months from each of the three major credit bureaus. The official place to request these is AnnualCreditReport.com – the only website authorized by the federal government for free annual reports. Through this site, you can access your Equifax, Experian, and TransUnion reports at no cost. (Tip: As of recent policy, the bureaus even allow free online reports weekly, making it easier than ever to monitor your credit.)

When you request your reports, consider getting all three. Each bureau’s file might have slight differences, and you’ll want to catch errors in any of them. Review the reports carefully for accuracy. Credit report errors are more common than you might think – one study found that about one-third of U.S. consumers have errors on their credit reports that could be hurting their scores. These mistakes are usually not in your favor, so finding and fixing them can potentially give your score a boost. Obtaining your reports is free and does not affect your credit score, making it a no-risk first step in your homebuying journey.

Spot Common Credit Report Errors

As you comb through your credit reports, be on the lookout for any information that doesn’t seem right. Some common credit report errors to watch for include:

• Accounts that don’t belong to you: Loans or credit cards on your report that you never opened (this could signal a mixed file or even identity theft).
• Incorrect account statuses: For example, a loan you paid off is still showing as active, or a closed account is listed as open with a balance.
• Payment mistakes: A payment is incorrectly marked as late or delinquent even though you paid on time. (Even a single reported late payment can hurt your score if it’s inaccurate.)
• Duplicate or outdated information: The same debt is listed twice, or negative items that should have aged off your report are still listed. Even credit utilization figures might be outdated or incorrect, making it appear you owe more than you do.

If you notice any such errors or anything else that seems amiss (like incorrect personal information, which is less critical for your score but should still be corrected), make a note of them. It can be helpful to cross-check all three reports – if an account shows up on one bureau but not the others, confirm which is correct. Being thorough here will give you a clear to-do list for cleanup.

How to Dispute and Fix Credit Report Errors

Found an error? Don’t panic – take action. Fixing credit report errors is a process you can do yourself, and it’s typically free. Here’s how to dispute mistakes on your credit report and get them corrected:

1. Document the issue: Gather any proof related to the error. For instance, if a paid-off loan is still marked unpaid, locate statements or payoff letters. Highlight the erroneous entries on your credit report copies.
2. Contact the credit bureau(s): You should dispute with each bureau that shows the error. All three bureaus have online dispute portals, which are often the fastest route. You can also dispute by mail – include a written letter explaining the mistake along with copies of supporting documents. (Keep copies for yourself of everything you send.)
3. Provide a clear explanation: In your dispute (whether online or by letter), clearly identify the item you believe is incorrect, state why it’s wrong, and request deletion or correction. For example: “Account XYZ shows a $5,000 balance, but I paid this off on June 1, 2025. Enclosed is a letter from the lender confirming a zero balance. Please update the account to Paid.”
4. Wait for the investigation: By law, the credit bureau generally has 30 days to investigate your dispute and provide a response. (If you provide additional information during the process, they may take up to 45 days.) The bureau will contact the creditor that furnished the data to verify its accuracy. In many cases, errors get corrected in this step.
5. Follow up: The bureau will send you the results of your dispute. If the error is confirmed, your report will be updated or the incorrect information removed. Successful disputes can quickly improve your credit score once the correct data is reflected. If, for some reason, the bureau claims the information is accurate. However, if you still believe it’s wrong, you can escalate the issue – for example, by contacting the creditor directly or adding a brief statement to your credit file. However, most routine errors (typos, outdated balances, mixed accounts) are resolved in the initial dispute process.

Give yourself enough time for this whole process. While many disputes are resolved within a month, some can take several weeks or longer, especially if multiple rounds of back-and-forth are needed. That’s why starting early (again, a few months ahead of your mortgage application) is so important.

Plan Ahead: Credit Fixes Take 3–6 Months (Start Early!)

When should you start fixing credit issues? In short, ASAP – at least 3 to 6 months before you apply for a mortgage. Mortgage experts note that boosting a credit score for approval can take as little as 3–6 months in some cases, but it could be longer if your credit has multiple problems. You want to allow plenty of time for disputes to be investigated and for your credit report and score to update accordingly. Even after an error is corrected or a debt is paid down, it might be another month or two before your credit score reflects that change (because creditors report updates at varying times).

Think of this as “credit spring cleaning” before your home purchase. If you start, say, six months in advance, you can request your free reports, handle any disputes through resolution (which might take a month or more), and then re-check your credit a few months later to ensure everything is accurate. This timeline also gives you a buffer to address any other credit improvement steps – for example, paying down high credit card balances or avoiding new credit inquiries – which can also positively impact your mortgage readiness. The key is not to procrastinate. As one consumer law firm advises, “review your credit reports for accuracy ahead of time” because waiting until you’re in the throes of homebuying could leave insufficient time to resolve disputes, causing you to miss out on the best rates.

In summary, start checking and fixing your credit early. By the time you’re seriously house-hunting and ready to prepare for a home loan in Billings, Montana, you’ll have cleared up mistakes, and you can approach lenders with confidence that your credit report isn’t holding you back.

How Credit Issues Affect Your Mortgage (Rates and Approval)

It bears repeating why all this matters: credit report errors or a low credit score can directly affect your mortgage options. Mortgage lenders in Montana (and everywhere) rely heavily on your credit profile when deciding to approve your loan and what interest rate to offer. If your report still shows unresolved issues – like collections that aren’t yours or mistaken late payments – your mortgage application could be at risk. You might only qualify for a smaller loan or a higher interest rate than you would if your report were clean. Lenders typically use the middle score from the three bureaus for mortgage decisions, so an error on even one bureau’s report can hurt.

A lower credit score = higher perceived risk to lenders. Even a difference of 20–50 points in score can significantly change your offered rate. For example, a credit report mistake that drags a high score (say 740) down into the mid-600s could mean you pay a higher interest rate on your mortgage. That translates to higher monthly payments and more interest over the years. In practical terms, as the CFPB notes, “errors on your credit report can reduce your score…which could mean a higher interest rate and less money in your pocket” if you don’t catch and correct them before applying.

Beyond the interest rate, serious errors could even cause a loan denial if they make you appear ineligible (for instance, an erroneously reported recent bankruptcy or delinquency). Additionally, the mortgage process could be delayed if the lender finds an inconsistency and requires it to be fixed mid-process. It’s much smoother to address everything before you reach the stage of making an offer on a house. By fixing credit errors ahead of time, you’ll improve your score and ensure you qualify for the best mortgage programs and rates available to you. Essentially, you’re putting yourself in the strongest financial position to buy that home in Billings.

The Advantage of Working with Local Billings Lenders

While you’re working on your credit, don’t underestimate the value of consulting a local lender in Billings, MT, for guidance. Montana has its own housing market nuances, and local mortgage professionals understand regional trends and borrower challenges in ways big nationwide banks might not. A lender based in Billings will be familiar with local home prices, property tax considerations, and state or city-specific loan programs that could benefit you. They can look at your credit and financial picture and offer personalized advice – for example, suggesting the most impactful ways to improve your score for the types of loans popular in our area.

Another perk of local lenders is the personalized service and quicker communication. When you’re trying to get a mortgage, having someone you can easily call or meet who already knows the Billings market can be a big stress reliever. Local lenders often take a more holistic view of Montana borrowers’ profiles and may work with you on finding solutions or credit tips if you’re on the cusp of qualifying. As one Montana mortgage team puts it, experts familiar with markets like Billings can offer insights tailored to local needs and long-term goals. They might even connect you with credit repair resources in Billings, MT, or at least guide you on what credit score you’ll likely need for homes in different price ranges around Yellowstone County.

When you’re ready, our real estate brokerage can recommend trusted Billings-area lenders who have a track record of helping homebuyers succeed. Working hand-in-hand with knowledgeable local professionals – both your Realtor and your lender – means you’ll get advice that fits the local market and your personal situation. It’s a team effort toward getting you those house keys!

Ready to Buy a Home? Let’s Chat!

Fixing credit errors may not be the most glamorous part of buying a home, but it’s one of the most crucial mortgage tips we can share in Billings, MT. By taking a few months to clean up your credit report and improve your score, you set yourself up for a smoother mortgage approval and potentially significant savings on your loan. Remember: check your reports, dispute any inaccuracies, and give it a little time. The result will be a stronger credit profile when you find that Montana dream home.

If you’re thinking about buying a home in the Billings area, our friendly team is here to help every step of the way. Contact us for more personalized guidance – whether you need advice on credit repair in Billings, MT, want to understand what you can afford, or are ready to start house-hunting. We’re happy to answer your questions and connect you with local resources as you prepare for a home loan in Billings, Montana. With some preparation and the proper support, you’ll be well on your way to opening the door to your new home! 🏡 Get in touch with us today to turn your homeownership goals into reality.

Sources:

1. Consumer Financial Protection Bureau – Mortgage loan and credit score FAQ
2. USA.gov – Official guidance on free credit reports
3. Federal Trade Commission – Disputing errors on credit reports (investigation timeline)
4. Homebuyer.com – Credit score improvement timeline for mortgage approval
5. Consumer Reports study via Homebuyer.com – Prevalence of credit report errors
6. Rocket Mortgage – Common credit report errors and dispute process
7. SmithMarco P.C. Law Blog – Impact of credit report errors on loans and importance of early disputes
8. Wood Team Home Mortgage (Montana) – Benefits of working with local Billings/MT lenders