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Check Your Credit Before Shopping For That Home Loan
Review Your Credit Score.
Nearly every bank, credit union, and mortgage lender relies on
a three digit score provided by one of the three major credit
bureaus to help them make lending decisions. A credit score can
range from the perfect 850 all the way down to the abysmal 300.
Scores under 720 may not qualify for the best interest rates, so
you should check your credit scores with all three bureaus before
shopping for a loan. You may discover you have some cleaning up
to do before you can take advantage of a great loan deal.
Scan Your Report for Mistakes.
Though some consumers struggle with debt, many more would-be
borrowers suffer needlessly because of mistakes they made in the
past or mistakes that credit bureau systems made when compiling
their reports. To avoid embarrassment and wasted time during the
loan origination process, you should review your report carefully
before you start shopping for loans. Dispute any inaccuracies
both with the credit bureau and with the creditor using certified
mail. If you find any long-lost bills you left unpaid, pay them.
A bill as insignificant as $100 can actually stall or derail the
closing process, costing you the chance to buy your dream
home.
Avoid Credit Applications.
In the weeks leading up to your home purchase, you may
consider switching banks or responding to attractive credit card
offers. Resist the urge to earn those frequent flyer miles,
because a flurry of applications can show up on your credit
report simultaneously. Therefore, lenders may grow concerned
about potential identity theft. Even worse, lenders might assume
you've lost control of your spending, making you an unsuitable
candidate for a home loan.
Do All Your Shopping on the Same Day.
For the same reasons, you should choose one day to make
inquiries from your favorite mortgage lenders. A few weeks after
your inquiries, your applications will show up on your report and
drag down your score by a few points. Because the bureau assumes
that every application may result in an approval, the amount of
your potential debt load increases significantly. In addition,
the market changes so frequently that quotes made on different
days cannot be compared directly. Be prepared to make your phone
calls, run the numbers, and accept a locked pre-approval all on
the same day.
Kevin Adelsberg is a writer for FDLoans.com. For additional
articles and an extensive resource for everything about loans,
please visit us at http://www.FDLoans.com
MORE RESOURCES:
EnerJex completes $50M credit facilityBizjournals.com, NC - 15 hours agoIn a release Tuesday, Overland Park-based EnerJex (OTCBB: EJXR) said it will use proceeds from the facility to redeem $6.3 million of outstanding 10 percent ... |
Credit - Google News
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