Home Page Our Homes For Sale New Listings/Price Chgs Contact Allen or Barbara Barbara's Blog

My New Blog

Score A Home
September 14th, 2010 11:24 AM

Too many prospective homeowners find out the importance of a good credit score only when they apply for a home mortgage and by then it is usually too late to correct any unforseen problems. 

 Before even looking for a home to purchase, it is a good idea to check your credit score at least 6 months prior to applying for a loan, and then take immediate steps to improve your score if any problems surface.  Make sure you check all three of the national credit reporting agencies:  Experian, Trans-Union and EquiFax as they may not all have the same accounts and there could be discrepancies from one to the other.

If you find an item that is reported in error, you do have the right to dispute it by contacting the credit reporting agency and explaining why you believe the item is inaccurate.  Supporting documentation can expedite the corrections.  If you do have derogatory items on the report that are accurate, you cannot have them removed, but you can take positive steps to counteract them.  Bring all accounts current as quickly as possible and continue making payments on time.  Nothing lowers a credit score more quickly than late payments.

Closing out credit accounts is actually a negative, rather than a positive.  Instead make an effort to pay down the balances and keep them well below the minimum or completely paid off, but do not close out the accounts.  Lenders want to see  a long credit management history.  A negative is having credit cards maxed out or nearly so with extremely high balances.  Every lender will use a debt to income ratio and will have to take these payments into consideration.

Another major negative is opening new accounts or making a big purchase such as a car loan, right before applying for a home mortgage.  This, along with a list of new "inquiries" on the report, will immediately lower a credit score.  Finally, after applying for a mortgage, never change the credit report with any new major purchases before closing on your loan.   This may completely change the debt to income ratio which will be checked again by the lender before loan proceeds are released for a purchase.  It could kill the deal!

A short sale or foreclosure will remain on a credit report for at least 7 years, but these steps will still help to improve a credit score and with written documentation to support any negative credit, it is still possible to work with a lender who will guide you and help you to "score a home" in the future. 

 

 


Posted in:General
Posted by Barbara Doeringer on September 14th, 2010 11:24 AMPost a Comment

Subscribe to this blog

Archives:

My Favorite Blogs:

Sites That Link to This Blog: