The FICO system, whose credit scores lenders use to determine whether you're credit-worthy and how favorable to set the terms, is set for a makeover. An BillMeLater is a new service that does what its name says: you can buy something paying using BillMeLater, they'll front the cash, and send you a bill later, but, Angela P. Williams tried for more than a decade to clear up her credit report after Equifax confused her records with those of a person with bad credit but a similar name. The company denied any wrongdoing, We focus so much on identity theft and safeguards against it that it may seem like freezing your credit is the only solution in a world of identity thieves. That may or may not be an accurate assessment (ask me the next time my credit card is duped), but credit freezes aren't for everyone. Consumerism Commentary offers a sort of The Consumer Data Industry Association estimates that 50-70,000 people have frozen their credit reports so far. Here's our post on Don't open any new lines of credit or go crazy with the credit card purchases between your home loan's approval and the actual closing date, warns Ilyce R. Glink (doesn't it look like we just tapped a bunch of keys at random to spell that name?) at Inman Real Estate News. Your lender will pull a second credit report before closing to make sure that you're still capable of paying your loan—so if you've done anything in the interim that could impact your ability to pay, rest assured it will show up.

This sounds like common sense, but it happens more than you'd expect. Back in college, I worked at a mortgage company helping loan officers prepare all the paperwork that goes into approving a home loan. Every month there was some mini-disaster from an overenthusiastic couple who screwed up their debt-to-income ratio with a huge furniture or car purchase before closing—we often had to send them scrambling for new sources of income, gifts to increase their down payments, and/or co-signers, or adjust the loan agreement to something less favorable to them in order to get the numbers right for re-approval.

Glink points out that you shouldn't be spending all that extra money in the first place, at least not until you've settled into your home and absorbed any unexpected additional costs:"Homes have ongoing maintenance issues and need repairs from time to time. If you start spending like mad and don't put any cash aside for needed repairs, you may discover that your new home is unaffordable. If, however, you can make do with your old furniture for a while, bank the savings and avoid increasing your credit card debt, you'll find it easier and more rewarding to be a homeowner."
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