Give Your Credit Worthiness a Checkup
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, you should give your credit worthiness a checkup.
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 and determine credit score health:
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.)
If you’ve been warned about pulling your credit score, 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:
- Get it straight from the horse's mouth: Equifax, Experian, Transunion
- Secondary credit source: Annual Credit Report
- Really cool sites with credit tools: Credit Sesame and Credit Karma
Just don’t have the local bank run your credit score. That will lower your credit worthiness. No kidding, it amounts to an average decrease of about five points per credit bureau.
There are hard and soft credit pulls. Hard credit pulls are run by organizations when you apply for credit, loans or mortgages and they stay on your credit report for a while. Then there’s soft pulls, which are inquiries that don’t wind up on 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 without getting into specifics.
Basically, your credit score health 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 score is competitive.
Now, ask yourself, is your credit score healthy?
Guaranteed Rate resources, your mortgage 101 – it’s that simple.
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