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Your report has an enormous effect on your ability to buy a home-not only on the likelihood that you will be approved for a mortgage, but also on the interest rate you will be charged if you are approved.
The information contained in your credit report is of great interest to mortgage lenders.
Before they allow a potential buyer to borrow thousands of dollars for a home, lenders want to be sure their money will be repaid.
In general, mortgage lenders put the most emphasis on the following parts of a potential buyer's credit report:
- Payment history
- Amount owed
- Length of credit history
- Types of credit
In these days of competitive real estate markets, the more financially prepared you are as a potential homebuyer, the more likely you will be to get the home you've always dreamed of.
A huge part of this financial preparedness is mortgage pre-approval.
The cleaner your report and the higher your credit score, the more likely you will become pre-approved for a mortgage at a low interest rate.
Therefore, if you are getting ready to shop for a home, you should obtain a copy of your credit report right away, before you even think of calling a realtor or setting foot in an open house.
The earlier you review your credit report, the more time you will have to correct errors before a mortgage lender checks your credit.
In addition to the report, mortgage lenders also look at your credit score.
In general, the higher your credit score, the lower the interest rate you will be charged.
Overall, a cleanreport and a high credit score will yield a smoother mortgage approval process.
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