Are you shopping for a Houston home? Your credit score can make or break your ability to qualify for a loan or to get affordable loan terms. If you need to improve your score, start early and try these tips.
Check it! Your credit report is the first thing a lender will check when prequalifying you for a home loan. There are three agencies and all three are required to provide a free copy of your report, once per year. Unless you have identity issues, all three can be ordered online. This credit report check does not affect your credit score.
Find errors on your report? Take the time to complete the dispute process. This process can take up to 90 days so start long before you need to qualify for a loan. Any error, including open accounts that you’ve already closed or payments you made that weren’t recorded or recorded as late, can have a negative effect on your credit score.
Identity theft might appear here too. Do you see accounts that don’t belong to you? Especially if you have a common name, there can sometimes be mix ups on your report. Make sure the items on your report belong to you.
Don’t open any new accounts. Opening a new line of credit is one of the worst things you can do when you’re trying to get approved for a home loan. This includes small accounts like at a department store or the purchase of a vehicle.
Lower your balances. The less you owe on any given account, the better. Try to keep your balances below 30% of your available credit. If you have the ability, pay credit accounts down to this before you apply for a loan and remember, it takes up to 30 days for changes to reflect on your credit reports.
To get the best rate on your home loan, give yourself time to make corrections and dispute items on your reports. The difference in your interest rate could mean the difference between an affordable loan and one that’s out of reach.
If you’re ready to start your home search, contact us today. You can Count on Chris to help you find your dream home.