Prepare Your Credit Report Before You Buy a Home
It is every person’s dream to have a home of their own and it is indeed a fact that buying a home
requires a huge amount of investment. The chances of being one step closer to buying a home requires
you to have a close look at your credit report. A credit report is a financial statement that shows an
individual’s payment history. Lenders and creditors investigate a person’s credit report since it shows a
person’s financial capabilities, financial stability and payment behavior. It becomes their basis on
whether they should approve you a loan or not.
Buying a home with a poor score results in paying more
Having a good credit report entails you convenience in getting prime loans and lower interest rates
which allow you to make smaller monthly payments. On the other hand, a bad credit report usually
translates into subprime loans and higher interest rates. The definition of a good credit report and bad
credit report usually vary from lender to lender but the average “good” score for a first time home buyer
would always be around 640. Moreover, some lenders aid people who have lower scores but only under
Experts suggest that a person’s debt versus income ratio be one of the vital factors when being
approved a loan. Lenders have a rule that the house payment should never exceed approximately 31
percent of the gross monthly income.
Here are certain aspects which have to be taken into consideration that will also help in improving
your file and credit score.
One major factor that influence your credit score is your payment history and if you are paying
your bills on time.
Amounts owed by you are another major factor. Your score can fall due to high credit card
utilization or owing a lot of money on several accounts.
Length of credit history, new credit and types of credit in use are several other factors that can
create an impact on your credit report.
It is desired to acquire your annual credit report from all three credit bureaus, Equifax, Experian
and Transunion. Every U.S. citizen can acquire his or her free credit reports, once a year from
each credit agency.
Potential homebuyers should request for all three statements from the agencies and must check
them for inaccuracies. In case you come across anything wrong, report it immediately to the
Lenders also investigate your credit report, and most of them make use of merged credit
statements. The “blender” file incorporates public records for liens, judgments, bankruptcies