Check Your Credit Before Getting a Mortgage

Posted by Matthew Lahti on Sunday, October 13th, 2013 at 9:32am

Unless you're one of the select few who can pay the full price of real estate with cash, you're going to need a mortgage to afford your purchase. Lenders look at your down payment and income to determine if you qualify for a loan. They also want to know how you handle your finances and they can get that information by looking at your credit report.

If you want to see what lenders see, you can order a copy. By law, you're entitled to one free report every year from each of the major credit bureaus: Equifax, Experian, and TransUnion. You can only get the document online without paying or subscribing to anything from AnnualCreditReport.com. If you order each bureau's option every four months, you'll get a constant picture of your credit throughout the year. You want to start this process many months before applying for the mortgage.

Once you get your report, examine it for any errors, especially in the numbers and types of creditors, their names and contact information, amounts owed, and payment histories. If you find any problems, contact the creditor and the bureau that reported it to get it fixed.

Watch out for late payments, foreclosures and bankruptcies. These red flags may affect your ability to get a mortgage or may raise your interest rates. If these negative listings are accurate, you cannot do anything about them except give them time. By law, they drop out of your report after about seven years. However, you can come up with reasonable explanations when you're asked about them by potential lenders.

If you want more information on what to do before buying a home, please contact us.

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