Get your credit ready to buy a home

You want to buy a home.  The first and most important step you can take is to get your credit ready to buy a home.  You have a great deal of tools at your disposal to check and repair your credit.  Do these from the comfort of your own home.  We recommend you do as much several months before you start home shopping so that you are ready to go when it is time to talk to a lender.

Your Credit Score

Credit Score for buying a home

This is the biggest and most talked about factor when financing nearly anything.  From cars, to homes, you want to have good credit.  Good credit keeps your interest rates low.  Work on your credit score every day of your life.  It is that important to you.  Sign up for a free credit reporting service, like Credit Karma.  There are a few to choose from, so look around at the one that suits you best.  Some of the major credit cards offer free credit checks.  These are great, but most are only on one of the three major reporting agencies and they don’t give you the same type of help as the companies dedicated to credit scores do.

After you sign up and enter your personal information, you will be shown your current credit scores.  All three reporting agencies will be represented.  It is important to keep all three in good shape.  Some lenders only look at one of them and some look at all of them.  The program will give you advice on how to improve your credit.

If you are not comfortable with using the online tools, you can always talk to a credit repair specialist.  You will most likely pay for them though.

Credit Score Factors

get your credit ready

As you get your credit ready to buy a home, do not open any more accounts.  One exception to this might be consolidating several accounts into one for a lower interest rate.  Check with a financial adviser for specific advice.  Generally speaking, you want to have your accounts stay the same.

One other exception to this rule is to have at least 3 credit lines active on your record.  Less than that and you may not qualify because of a lack of credit.

Don’t start closing old accounts either, especially if you have old accounts.  You may not use them, but having them on your report is good because you show that you can keep accounts in good standing over time.  Use them every once in a while and pay them off right away.  This will boost your credit score because these good accounts will have current data to report to the agencies.  With that said, it is imperative that you only use them for smaller amounts and pay them off each month.  Big purchases foul up your ratios.  If you are close to closing, a large purchase can actually disqualify you from some loans.

Get the house before the car.  It is much easier to get a car loan than a home loan.  Don’t blow your chances at the home loan by purchasing a new car beforehand.

Look for anything that is not correct.  Credit reporting is not perfect.  You may have something hurting you that does not belong.  If you see something that is not right, dispute it.

Keep Up the Good Work!

credit repair

Do you want to blow up your closing the week before?  Buying a bunch of stuff before you close will cause the lender to freak out.  Simply moving money around from account to account will also raise red flags to the lender.  In the weeks leading up to your closing, don’t do anything differently than your normal deposits and bills.  Odd activity is flagged and you may be required to provide paper trials for all the odd transactions.  Even worse, you may delay the closing.

We recommend doing as much as you can on your own.  If you are in good shape, it may be time to talk to an agent and a lender.  Your home buying experience may take some time depending on your requirements.  Contact us today and begin your journey to purchasing a new home.

Want Some Help?

What to buy a home, but feeling overwhelmed or maybe just want someone to help you out?  Just give us a call and we will walk you through the steps you need to take to get in your new home.  Don’t worry if your credit isn’t the best.  Start right now and you will be one step closer to owning your home.  It isn’t as hard as you think.