Buying a home can entail a long list of factors, which include determining where you want to live, what size residence best fits your needs, and how much house you can afford (as well as the amount of mortgage payment and interest rate). While many people believe that getting pre-approved for a mortgage is a key first step in the home buying process, what is oftentimes even more important is making sure that you have a good credit score.
Your credit score can be compared to a financial “report card” of sorts, as it provides information on how – and how well – you’ve paid your debts. There are several factors that will determine your overall credit score. These include:
- Payment History – 35%
- Current Debts – 30%
- Credit History (i.e., how long you have had credit in your name) – 15%
- New Credit Applications – 10%
- Types of Current Credit – 10%
In addition to checking your credit score, be sure that you review a copy of your current credit report. Each year, you are entitled to one free credit report from each of the three major credit bureaus – Equifax, Experian, and TransUnion – by going to www.annualcreditreport.com.
If you happen to notice any errors on your credit report, you are allowed to write a letter of dispute to the credit bureau that is reporting the incorrect information. In your letter, be sure that you specify the payment information and amount – and that you also ask that this information be removed from your record. You will also need to contact the company or organization that provided the wrong information – such as a creditors or medical provider – and ask them to update the information with the credit bureau.
Are you considering making a move soon? If so, we can help. Contact Us today, and we will assist you in gathering all of the information that you will need in order to move forward with the process.