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How to Prepare Your Credit Before Applying For A Mortgage

Are you hoping to purchase a home in the near future? Unless you have the funds to buy the house with cash, you will likely need to apply for a mortgage. During the mortgage application process, your credit score will be a big factor. But what’s a good credit score to buy a house? The answer isn’t quite that simple, but before you apply for a home loan, it is in your best interest to make sure that your credit is in the best shape possible.

You can do a lot to prepare your credit for a mortgage. If you haven’t paid much attention to your credit score over the years, now is the time to start. Getting your credit into the best possible shape is a great way to start your mortgage journey.

Here are a few steps that might help you prepare your credit before applying for a mortgage.

Order Your Credit Report
Before you start shopping around for the best mortgage rates or turn to a mortgage calculator, you need to understand your credit score. One of the best ways to do this is by ordering a copy of your credit report from any of the three major credit bureaus — Equifax, Experian, or TransUnion. It makes sense to order your credit report from the three major credit bureaus once a year because you don’t want any surprises when it comes to your credit.

Carefully Review Your Credit Report
Once you receive your credit report, carefully review it for any inaccuracies, mistakes, or discrepancies. For example, take some time to look over the spelling of your name, make sure your address is correct, and double check for any fraudulent accounts that you don’t recognize to be yours.

If anything looks out of the ordinary or incorrect, try to resolve the issue as soon as possible by contacting the credit bureaus. You wouldn’t want a mistake to get in the way of getting the funding that you need to purchase a new home, especially if there is just a minor error.

Pay Your Bills On Time
One of the simplest ways to improve your credit score over time is by making all your payments by each of their due dates. A late or missed payment might hurt your credit score and decrease your chances of getting the best possible mortgage rate from a lender.

Decrease What You Owe
A good, credit-improving rule of thumb is to focus on decreasing as much of your outstanding debts as you can. It is great for your credit when you make payments on time, and it’s even better when you can pay more than the minimum required. Whether it’s a student loan, credit card bills, or any other type of debt, the sooner you finish paying them off, the better it will reflect in your credit score. A lender will likely find you to be a more reliable applicant if you are steadily paying off what you owe.

On the other hand, if you continue to pile on debt or have any delinquent accounts, a lender may find you to be less reliable as an applicant. Not only do you want to be approved for your mortgage, but you also want to receive the best interest rates possible.

Don’t Buy Before You’re Ready
Deciding to purchase a home and take out a mortgage is a big financial investment. You should do everything in your power to prepare your credit for your mortgage. Your mortgage is a long-term investment. Take the time to learn about your credit, clear up any errors, and make improvements before you start with your mortgage application.

To learn more about the importance of credit and your mortgage, contact one of our expert mortgage professionals.