When people prepare to purchase a home, the excitement of home tours and scoping out neighborhoods become a priority. Envisioning furniture placement and preplanning celebrations with loved ones can get in the way of the first real step that’s essential to any home buying experience – your credit.
Generally there is a soft pull first to prequalify the applicant so that they can go shopping confidently. Once they are ready to apply, then they pull credit from all three credit reporting agencies, which is an application to apply (also called a hard inquiry).This determines the amount that they’re willing to loan you for this home purchase. Your debt-to-income ratio is also a key factor that can have an impact on the interest rate, directly relating to your estimated monthly mortgage payment. One of the best ways to prepare for home buying is to eliminate or reduce debt, and limit opening new lines of credit, while also making sure you are paying your bills on time.
If it’s been some time since you’ve taken a look at your credit report and FICO® Score, use one of the many available resources online to request this information. You can check with your lender to see if they are offering your FICO® Score for free by visiting this link and you can receive a credit report for free at www.annualcreditreport.com. You don’t want anything to appear as a surprise, so take the time to review and ensure all information is accurate before involving a lender. Completing this prior to the buying process makes room to dispute any items that are inaccurate or inquire about things you may not remember. Doing all that you can do upfront to prevent any snags or hiccups in the process saves you time, while providing peace of mind that you’ve done your due diligence to ensure the smoothest process possible. It is so important to make sure that the credit score you are reviewing is the actual score that your lender is looking at during this process.
To learn more about ways to enhance your credit health and to learn directly from credit experts, visit www.scoreabetterfuture.com.
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