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Check Your Credit Report Before Applying for a Mortgage

Posted on Wednesday, September 16th, 2020 at 1:00am.

Check Your Credit Report Before Applying for a Mortgage

Applying for a mortgage to buy the house of your dreams can be a daunting process. You have to submit an application, paystubs, tax returns and other documentation. In addition, the lender will base their decision and how much money to loan you partially on your credit score.

Reasons to Check Your Credit

Before you apply for a mortgage, it’s a good idea to know where your credit currently stands. The best way to find out is to request copies of your credit reports. You’re entitled to receive free copies of your reports from the three credit reporting agencies: Equifax, Experian and TransUnion.

One reason? You can compare your score to your lender’s guidelines to see if you’d have a good shot at being approved for a mortgage. If your score is too low, you can take steps to raise it. You can pay down your credit card balances, consolidate debt to lower your interest rates and pay it off faster. Additionally, be sure to pay all of your bills on time. It may take several months to have an impact, so the sooner you start making changes, the better.

You should also check your credit before applying for a mortgage to find out if your reports contain any errors. Sometimes records get mixed up if people have the same name or a company reports information incorrectly. If you find an error on your report, it could also be due to identify theft. Data breaches happen all the time, and criminals use stolen information to open fraudulent accounts. You might be unaware unless you check your credit report.

Errors on your credit report could prevent you from getting a mortgage for which you actually qualify. If your credit report shows that you have more debt than you really do or that you’re behind on payments when you really aren’t, that could cause the lender to consider you too risky for a mortgage.

If you find that your credit report contains errors or accounts that you didn’t open, you should contact the credit reporting agency to dispute the information. They can investigate to find out what happened and correct errors. If you’ve been a victim of identity theft, contact law enforcement.

Check Your Credit Early

When a lender is deciding whether or not to approve your mortgage application, your credit score is one of the most important pieces of information they’ll consider. Several months before you fill out your mortgage application, request copies of your credit reports. See where your score currently stands and check for errors. Then you can take action to raise your score and correct any mistakes so you can turn your dream of owning a home into a reality.