By: Josh Kemper - Mortgage Banker- First Integrity Mortgage Services
Congratulations! You have decided to purchase a new home or refinance your current mortgage- Now what?
If you're planning on buying a home soon or refinancing your current mortgage, I recommend checking your credit reports and scores as quickly as possible. Lenders use your credit information to determine whether you will qualify for a mortgage loan and what your interest rate will be. The higher your credit score is, the lower the interest rate you might be able to receive.
There are three major credit reporting agencies- Equifax, Experian, and TransUnion. You are entitled to a free copy of your credit report once a year from each of three major reporting agencies. To obtain a free, full credit report from all three bureaus once a year, visit www.annualcreditreport.com. When looking over your credit, it is crucial to review the entire report to make sure all information is accurate. Make sure you check your reports from all three bureaus since some creditors only report to one or two bureaus. Lenders must have reports from all three to move forward with the mortgage process.
Next, you should make sure there is nothing on your credit report that is inaccurate, fraudulent, or outdated. If any errors are found, report them to the credit reporting agency and the company that provided the information to that credit reporting company right away. If you find an error on one of your reports, cross-check your credit reports from all three reporting agencies.
To make sure that your credit is in the best shape possible for when you start the mortgage process, I suggest the following:
- Make sure bills are paid on time – late payments on any of your current accounts can negatively affect your score.
- Judgments – after reviewing your report, if you have any judgments in your name, make sure and pay them and get a confirmation from the courts commonly called a "Satisfaction of Judgment,” to make sure it is removed from your credit report.
- Credit Cards – Try to keep your credit card balances under 30% of the allowed balance.
- DO NOT apply for any new credit right before or during the mortgage process. These credit inquiries that are created from new credit will lower your credit score.
- DO NOT close any accounts or consolidate debt during the mortgage process.
If you follow the simple steps, you will have your credit profile in the best possible shape for buying your next home. If you have questions, contact your loan officer before and during the loan process before making any credit decisions. Even if you have a simple question, you should always double-check to ensure you do not damage your credit profile or put your contract in jeopardy.
For more information on this topic or if you haveany questions about purchasing or refinancing your home, please contact Josh Kemper, NMLS #2001000, at (314) 541-7766 or jkemper@firstintegrity.com