One of the first steps in starting the home buying process is to check your Credit.
Don’t wait to the last minute. It is important that you check you credit early in your search for a home – if their are mistakes by the credit reporting companies you want time to correct them. Use the link to Consumer Information to learn the steps you have to take to dispute errors on a credit report.
This page not only contains links to free credit reports, it includes information I have assembled on your behalf on the importance of you credit in buying a home and answers to frequently asked questions.
After you have reviewed your credit report, take the next step of pre-quailifing for a loan. Learn more about pre-qualifying and mortgages.
I have reviewed two websites that actually provide your credit score for free. www.quizzle.com and www.creditkarma.com.
Of the two I prefer Quizzle. Quizzle is a part of the Quicken Loans family of companies. Getting a free credit report from Quizzle is simple. You need to register first, providing information such as your name and email address but you do not have to provide your Social Security number- a real plus. Quizzle will send you a link once you have registered to activate your account. To finish the activation you need to enter only your address and date of birth. Quizzle will use this information to find your credit file on Experian.
To confirm your identity Quizzle then asks a few questions from your credit report that only you would know. Once finished you will have your free credit score immediately.
The second site, Credit Karma, also provides a free credit report but here you do have to enter your Social Security number. Both have excellent tools to manage your financing. Explore both before making a final decision.
[styled_box title=”Why your credit is so important” class=”sb_yellow”]Your credit history determines what loans you will qualify for and the interest rate you will pay. Lenders get your credit history by obtaining your credit score.
You’ll most likely need to borrow funds from a lender. This is why credit is such an important component to the home buying process.
[styled_box title=”What is a credit score?” class=”sb_blue”]A credit score provides an easy way for lenders to numerically judge your credit at a point in time. It gauges how likely you are to repay your loan in a timely manner. The better your history appears, the more attractive you become as a loan customer.
[styled_box title=”The lending industry follows these house-buying guidelines:” class=”sb_green”]
Better credit scores usually lead to better rates
Lower scores do not automatically disqualify you
As your credit information changes, your score changes[/styled_box]
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[faq_question]Do I need perfect credit?[/faq_question]
[faq_answer]Absolutely not. Lenders aren’t looking for consumers with “perfect credit.” If you feel you’re ready for homeownership, you may be continuing to rent unnecessarily instead of building equity in the home of your dreams. And the longer you put off buying a home, the longer it will take to build equity. It’s easy to apply for a loan. Loan consulars provide expert advice aimed specifically at first-time homebuyers.
[faq_question]Improving your Credit[/faq_question]
[faq_answer]There are several different ways you can improve your credit score. One way is through credit counseling or debt management agencies. These are “non-profit” companies that provide several different types of services.
[faq_question]Do I need credit counseling?[/faq_question]
[faq_answer]As with anything else in life, it’s nice to have someone guide us through the rough spots. That’s essentially what credit counseling is.
Credit counselors will work with both you and your lenders to find a fair resolution. Most lenders are willing to do this because they receive some of their owed money back in a timely fashion. As you improve your credit, your score will improve as well, which can widen your choice in homes.
[faq_question]How can I improve my credit score?[/faq_question]
[faq_answer]Some people need outside help, others don’t. Here are a few things you can do:
Cut back on unnecessary expenses
Apply the savings to paying off debts
Pay off and close multiple credit card accounts
Paying off your debts will generally improve your score within a few months. Keep this goal in mind and work toward it diligently.
[faq_question]Monitor Your Credit[/faq_question]
[faq_answer]Your credit score is a key determinant of the interest rates you’ll pay when borrowing money. Whether you have excellent, good, or poor credit, it’s important to monitor your credit situation.