Safeguard Your Credit Before Getting a Mortgage
A little planning and extra caution can pay off before you apply for that mortgage.
Credit scores are a critical factor that lenders consider in deciding whether you can get a new mortgage or not. Your score determines if you can qualify for a loan and how much you will pay for it.
Considering of the importance of your score, there are a few noteworthy points that borrowers need to be aware of before applying for a mortgage. Credit score models use a variety of sources in a credit report to calculate the big number.
Things that Impact Credit Scores:
Planning to buy a home or refinance in the next few months? There are things to avoid during the 2 to 3 month period before applying for a mortgage that can reduce your credit score, which could affect your chances of qualifying, plus raise the mortgage rate and your monthly payments.
Avoid These Things Before Applying for a Loan:
Another thing, look for errors on your credit report and dispute the accuracy if you find any. Consumer disputes must be investigated by the credit reporting agencies within 30 days of reporting an error. If the derogatory information cannot be confirmed by the source during that time period, it must be removed from your report, which could boost your credit score.
Credit scores are a critical factor that lenders consider in deciding whether you can get a new mortgage or not. Your score determines if you can qualify for a loan and how much you will pay for it.
Considering of the importance of your score, there are a few noteworthy points that borrowers need to be aware of before applying for a mortgage. Credit score models use a variety of sources in a credit report to calculate the big number.
Things that Impact Credit Scores:
- Amount of time since accounts were opened
- Number and type of accounts with balances
- Proportion of current balances to credit limits
- Number of late payments over 30 days past due
- How long delinquent accounts were past due
- Bankruptcy, judgments, liens, collection accounts
Planning to buy a home or refinance in the next few months? There are things to avoid during the 2 to 3 month period before applying for a mortgage that can reduce your credit score, which could affect your chances of qualifying, plus raise the mortgage rate and your monthly payments.
Avoid These Things Before Applying for a Loan:
- Do not apply for any new credit cards before getting a loan
- That includes not opening new accounts to transfer credit balances
- Avoid running up credit card balances, but reduce them instead
- Don’t buy a vehicle that requires getting new a loan financed
- It is not a good idea to close any accounts with or without a balance
- Do not allow any payments to go over 30 days late or to collection
Another thing, look for errors on your credit report and dispute the accuracy if you find any. Consumer disputes must be investigated by the credit reporting agencies within 30 days of reporting an error. If the derogatory information cannot be confirmed by the source during that time period, it must be removed from your report, which could boost your credit score.
