If you’re planning on refinancing your home or looking at a new home loan, pulling up a copy of your credit history should be the first step. You need to know what creditors see when looking at your history and your credit score. The last thing you want is to be surprised by your credit history when sitting in front of a lender.
You can access a free copy of your credit history by going to annualcreditreport.com, which pulls its data from the three main credit reporting agencies, Equifax, Experian and TransUnion. Consumers are encouraged to get this report at least once a year, however, these reports can contain mistakes so it’s important to correct those errors before applying for a home loan, or really any type of loan.
If you have a fairly common name, there could be several mistakes on your credit history. These documents can only report what they have been told so if a creditor has reported misinformation, it could end up on the report. This is definitely something that you should get corrected right away.
Pay On Time
One of the most important things on your credit report is paying your bills on time. Paying your bills on time matters most in your credit report because lenders and creditors want to see how responsible you are with borrowed money.
Account balances are also important. A borrower who regularly keeps the balance at or near the allowable limit can see their scores drop slightly. But keeping a relatively low balance at all times as well as paying on time can increase or improve your score.
Late payments on a credit card, especially one you’ve had for years, may not affect your credit score or history too much, especially if there is a 30 day grace period, but continually missing payments or late payments can wreak havoc on the score.
This is different for mortgage payments. A late mortgage payment can count more against you than a late credit card payment. Bankruptcies or foreclosure can be the most damaging to your credit report even though the damages lessened over time.
Creditors want to know what you’ve done over the last 1 to 2 years. This is what matters most because we all make mistakes but continuing to make those mistakes will cause creditors to decline loan applications.
The goal is to make sure that any payments you make are on time. What Matters Most in Your Credit Report when it comes to applying for a home loan. For more information on your credit history, lenders in our area, or homes in South Nashville, browse our website or contact our office at any time.