Buying A Home? The First Step Is To Check Your Credit

Buying a home is an exciting time in a person’s life. It is a long process full of a lot of things to handle and steps to take. However, before you can get to those steps, one of the first things you should do is to check your credit. This can help ensure you are ready and prepared to move forward.

Whether you want to clear the collections showing up, or simply check to ensure there are no major errors, checking your credit is a crucial part of preparing yourself financially to buy a home. This article is going to take a closer look at the importance of credit when buying a home. It will also go over how to check your credit easily and quickly.

What is the Importance of Your Credit?

Few things are as important to your home-buying journey as your credit. Your credit report will dictate your past borrowing history in terms of credit cards, loans, lines of credit and more. It gives lenders an inside look at how well you have borrowed and paid back money in the past. If you have struggled throughout your borrowing history, your credit report will show it and lenders will often deem you a riskier borrower.

This can make mortgage rates and terms less favorable, and could even disqualify you from getting a mortgage altogether. While you don’t need perfect credit to get a home, you should at least have a positive borrowing history and a reputation for making your required payments on time and in full. On the other hand, a good credit score can help your case. It can get you access to better rates and more favorable terms.

How to Check Your Credit?

Now that you know the impact of your credit in regards to getting a good deal on a house, checking your credit report is something you should be doing. Even if you aren’t looking for a home, you should check your credit report at least once a year to make sure everything is in order. But how do you do that?

Well, the first step is to reach out to your credit bureau and request a copy of your report. This can be done online or via a phone call. You have a right to one free copy every year. We recommend you take advantage of it. When you have the report, it is important to go through it and make sure everything is correct. This includes names and addresses, accounts, balances and any marks, comments or notes.

If you have any issues, disputes or problems, be sure to reach out to the credit bureau and make your case. While removing legitimate marks and demerits likely isn’t possible, getting errors removed is generally a good idea and can drastically improve your credit as a whole.

In addition to actually checking your report, your credit score can be a good indication of your overall credit. Credit scores in the USA range from 300-850, and give a general look at the health of your credit. If you notice your credit score dropping, it could be a sign that something is wrong with your report, and could warrant closer investigation.

Tips to Improve Your Credit

While a check of your credit report could reveal some errors or mistakes that have led to bad credit, your bad credit could also be the result of your own behavior over time. Either way, having bad credit and a low credit score can make finding an affordable mortgage rate difficult.

As a result, you should be trying to improve your credit score in the months before you attempt to buy a home. Some of the best ways to go about improving your credit are:

  • Pay your bills on time and in full
  • Keep your credit utilization low
  • Use credit responsibly
  • Don’t apply for too much new credit
  • Keep older credit accounts open

By using these tips and making a general effort to avoid spending beyond your means, you would be surprised at how quickly your credit can improve. While it won’t happen overnight, if you work hard and make sacrifices in the right places, you are bound to see some improvement.

In conclusion, we hope that this blog post has been able to help you learn the importance of your credit in the home buying process. If your credit is bad, or your report is full of errors, you will generally want to get that dealt with before attempting to buy a home.