Your Credit: Fit or Flabby?
The thought of owning a new home is pretty exciting. Unfortunately, home buying isn’t something they teach in school and all you have to depend on are ads – so not helpful. The truth is, if you are armed with the right information and are organized, the process can be a lot less stressful.
So, what’s important? Well, before you consider hiring an agent, looking at places online or talking with a lender, your credit should be in good shape.
Credit Low Down
If you’re trying to buy a house you really need to show the lender you can pay your bills on time and you’re not drowning in credit card debt. The credit agencies don’t make the credit score formula public – yeah bummer, but we do know how they weigh credit behavior:
35% Payment history
30% Amount you currently owe creditors
15% Length of your credit history
10% Number of new credit accounts you’ve opened or applied for (fewer is better)
10% Mix of credit accounts you have (mortgages, credit cards, installment loans, etc.)
So you’ve been warned about pulling your credit and here’s the deal: you can pull your own credit every day, all day with no consequence.
How is this possible you wonder? Because it’s your credit and you’re allowed to look at it anytime you want – now go take a look:
- Go straight to the horse: Equifax, Experian, Transunion
- Secondary credit source: Annual Credit Report
- Really cool sites with credit tools: Credit Sesame and Credit Karma
Just don’t ask your buddy at the local bank to run your credit ‘cause it’s a hard pull and will lower your credit scores. Yeah no kidding, its amounts to an average of about 5 points per credit bureau.
Umm, what’s a hard pull? There are hard and soft credit pulls. The hard credit pulls are the ones that stay on your credit report when you’re buying a car or applying for a credit card. Then there’s the soft pull, these are inquiries that don’t report to your credit report. For example, all those credit card offerings you get in the mail are a result of soft pulls. Soft credit pulls give companies a general idea of your credit worthiness.
Look, basically, the health of your credit is the first step when you are considering buying new digs. If you want to run ahead of the class and demystify the Mortgage Process a little faster, check out our rock star eBook – it’s totally free.
Oh! One more thing, the best rates are reserved for those with the highest credit scores so it is in your financial interest (yes, pun intended here) to make sure your credit has a six pack.
Now, ask yourself, is your credit fit or flabby?
Guaranteed Rate resources, your mortgage 101 – it’s that simple.
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