Preparing My Credit Report and Score to Purchase My First Home

Preparing your credit report and score before you purchase a home is a good idea. It can save you a lot of headaches as well as a lot of money as well. It is estimated that 70% of credit reports have errors on them and the last thing you need is finding out yours falls into this category right before your home purchase.

The first step to preparing your credit file would be to obtain a copy of your credit reports from the three main bureaus (Equifax, Transunion & Experian). Try and do this a couple of months before you apply for your home loan. This will give you enough time to take care of any issues you might find.

It is also important to make sure you receive a copy of not only your credit reports but credit scores as well. Lenders will ultimately use your credit scores to decide what kind of interest rate you will receive on your loan. There are certain steps you can take to positively influence your scores no matter your current scores.

One of the fastest actions you can take is to pay down any high balances you have on any revolving credit accounts you may have, which include credit cards, gas cards as well as department store cards. This helps your credit score because part of the credit scoring formula looks at your total credit limit and compares it to how much of it you have spent. The lower the amount used, the better impact it would have on your credit scores.

Lenders look at your three credit scores and use the middle one to determine your interest rate and term. For example, if you have an Equifax score of 640, a Transunion of 677 and an Experian of 687, the score used would be the Transunion score of 677.

Source by Tony Banks

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