Providing personal information part of the lending process
These days, it’s important to be smart with personal information such as your Social Security number. However, if you’re interested in buying a home, that’s one bit of information you’ll need to share with your lender.
A substantial amount of money is borrowed for most home purchases and mortgage companies simply need to acquire an understanding of your financial well-being and ability to repay. After all, would you loan money to a friend if they had a history of not repaying? Probably not. This is why mortgage companies need to do their homework.
It’s the same reason a lender also requires the submission of federal tax returns, W-2 forms, pay stubs and bank statements. Before your lender requests those documents, they’ll ask for your Social Security number, which allows them to pull your credit report and help you get pre-approved. If you’ve applied using the Digital Mortgage, that can happen in as quickly as 20 minutes, and you’ll receive your free credit scores* from all three credit bureaus.
Your credit score—300 to 629 is generally considered bad, 630 to 689 is fair or average, 690 to 719 is good, 720 and up is excellent**—indicates the likelihood you’ll repay and impacts the interest rate or loan type for which you may qualify. Higher scores typically mean lower rates.
While you may be concerned that having your credit report pulled will negatively affect your credit score, don’t worry—the impact is minimal. An inquiry typically only takes a few points off your score.*** Over time, however, you’ll have an opportunity to make that up.
There are several ways you can maintain or improve your score, including staying current on existing accounts and continuing to use your credit as normal. It’s important to know what not to do as well—don’t apply for additional new credit, max out your credit cards or consolidate your debt, among other things.
The process of becoming a homeowner typically starts with determining why you want to buy and whether you can afford it. Providing the information required for a lender to verify you’re a worthy candidate for a loan is just another step that will get you that much closer to homeownership.
*If applicant self-reports credit score as “needs improvement,” Guaranteed Rate will not run credit or provide free credit scores via the Digital Mortgage. Applicant may request credit scores by contacting Guaranteed Rate.
***Source: Consumer Financial Protection Bureau