Preparing Your Credit

Before considering a home purchase, you need to review your current credit report so that you can be aware of any “surprises” that impact your credit score and will take time to resolve. Credit scores are mathematically determined by a number of factors gleaned from a credit history, including how timely you pay your bills and what kind of debts you hold (short or long term, large or small amounts, ratio of credit allowance to balance).

The best time to tackle cleaning up your credit report of any mistakes is 30-60 days in advance of starting the buying process. Credit reporting mistakes are common, and can adversely affect your mortgage options. Therefore, cleaning up your credit report is very important, as the kind of credit rating you carry will largely determine what kind of loan (amount & terms) you can receive. In some cases, it can even prevent you from qualifying.

You should be wary of companies that advertise fixing your credit report for you. By law, the only things that can be erased or “fixed” on a credit report are mistakes, and you are the best candidate to report these mistakes to the three major reporting agencies. Each of the three major credit reporting agencies lets you file disputes online, by phone or by mail. The credit reporting agency will then contact the lender who reported the mistake within a specified period of time to resolve the dispute. The credit reporting agency will then recalculate your score.

You are entitled to a free credit report from each of the three major credit agencies once a year. You can access this free service and your credit reports from Equifax, Experian, and TransUnion by visiting www.annualcreditreport.com

Remember, if you are unsure about how your credit will relate to your real estate experience, Badgley & Badgley would be happy to help you or refer you to a reputable lender. They have a professional understanding of the steps involved in buying a home, and they can help you make the most of your situation.