Looking to buy a home soon? If so, you’ll want to start saving for a down payment — and thinking about getting pre-approved for a home loan. But before you do, it’s worth checking your credit score to see whether you need to bring it up to increase your chances of qualifying.
Your first step is to visit www.annualcreditreport.com to get your free credit report. Some of the things lenders will look for include your debt-to-income ratio, the number of late payments, recent credit inquiries and how many credit accounts you have open.
For an additional fee, you can visit www.MyFico.com to learn your FICO score, which is a key factor in your ability to qualify for a loan and a reasonable interest rate. The higher your score is, the better your chances are of getting a reasonable interest rate.
If you find out that your score isn’t yet at an ideal place to qualify for an affordable home loan, consider taking a few months to get it within a range that improves your chances of qualifying.
Here are a few key tips from Bankrate.com, a leading online aggregator of financial rate information:
- Pay your bills on time every month. Late payments lower your credit score.
- Try to pay off your existing balances each month, or keep them within a reasonable range. Your debt-to-income ratio is a big factor in determining your credit worthiness and ability to repay a home loan.
- Don’t close any accounts for six months, especially your older credit accounts. They help establish your long-term credit history.
- Need a score boost quickly? Speed the process up with rapid rescoring through a lender who is subscribed to this special service. If you have legitimate errors on your credit report, rapid rescoring can address and correct them in as little as 72 hours. The service can run about $50 per account but could save you thousands on your loan.
Your agent is a great resource for advice. Call me to learn how you can improve your credit score and better your chances of getting pre-approved for a home loan.
For more information about home loans, visit the Mortgages Guide in the Get Advice section of remax.com.