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Buying a Home? Get Your Credit Score Ready

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This is an excerpt from our eBook, The ABCs of Buying Your First Home. Get the full eBook for FREE. Download here.

Lenders use a variety of tools to determine your likelihood of repaying your home loan, but one of the most important reference points is your credit score. As such, you’ll want to make sure it’s in good shape when you apply for a mortgage.

You can request copies of your credit reports from the three major credit reporting agencies (Experian, Equifax and TransUnion) that summarize your lines of credit with their limits, balances, minimum payments and payment history. Lenders rely on your credit reports and scores to evaluate your future behavior. You can access your free credit report (limited to one free report annually from each agency) at www.annualcreditreport.com to check for accuracy.

The better your credit score, the more options you have for loan products. Many loan programs rely on “risk-based pricing” which means you’ll pay a higher interest rate if you appear to be a greater credit risk or have a low credit score. The lowest interest rates are reserved for borrowers with a credit score of 740 or above (up to the highest score of 850).

While it may take a few months for your credit score to improve, some of the steps you can take to raise your score include:
 

  • Pay down your credit card balances to less than 25% of the limit on each card

  • Bring any late accounts up to date and pay off any late fees or over-the-limit fees

  • Pay all your bills on time—and pay at least the minimum

  • Keep your oldest credit line open—closing accounts not only reduces your overall credit availability but it also means that you lose a long payment history

  • Avoid applying for new credit other than a mortgage


Mountain America Credit Union has loan consultants available for more information. They can also provide you with individualized suggestions about how to improve your credit score.

Knowing how to get your credit score ready for buying a home is just one of the many topics covered in our eBook, THE ABCs OF BUYING YOUR FIRST HOME. This book offers a practical approach to help first-time home buyers. Filled with industry insider tips, this eBook covers home buying essentials such as:

  • Setting a home buying budget

  • Choosing the right real estate agent

  • Determining the best mortgage for you

  • Getting your credit score ready for a home purchase

  • And more!

 

Download my eBook

 

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