Check Your Credit Before You Shop for a New Home

Buying a home is a big step. A home mortgage is a long-term commitment, unlike any other item you’ll buy. To prepare for applying for a mortgage, take these steps to make sure your credit is in good shape.

The first thing to do is check your credit reports. You can do this once a year for free. Pull your records from all three credit bureaus. Read over them, and make sure all of the information is correct. For a small fee, you can also get your overall credit score.

If you find any errors on your credit report, work on getting them cleaned up before applying for a mortgage. It will make the process easier, and it could raise your score, which could get you a better rate. That can translate into saving thousands of dollars in interest over the life of the loan.

Common credit report errors include payments showing as late that really weren’t, and bills showing outstanding that have been paid off. Follow the credit bureau’s instructions to fix any errors you find.

Late payments can drop your credit score, but you can improve it by making all future payments on time. Experts also say that you can bump your score up by a few points by paying down your credit card balances. However, you’ll need to keep your balances down, so don’t charge new purchases to those credit cards.

Applying for new credit will also temporarily lower your credit score, so don’t buy any big ticket items, like a car or furniture, in the months before applying for a mortgage loan. Ideally you should not take on any new debt within a year of buying a home.

Finally, don’t close old accounts thinking it will raise your score. In general, you want to show a long, reliable credit history, so make sure you keep your oldest credit card open. Use your credit wisely, but don’t abuse it.

Making sure your credit is as good as it can be can save you money in the long run on a mortgage, as well as let you know how much house you can afford. This will let you shop for a home with confidence.

If you have any questions about checking your credit score or getting a mortgage pre-approval, contact me to set up an appointment for a consultation. I’d be happy to offer you suggestions on how to improve your score and help you find the home of your dreams.

Patty Ross
Sotheby's International Realty 
831-236-4513 

pattyre@comcast.net  

www.pattyrosscarmel.com 

Photo courtesy Marius Mauresan, Stock.XCHNG.