Your credit report and credit score are important factors in home loan approval.
So what advice do the credit reporting agencies like Equifax, Experian, and TransUnion say you should do when planning to apply for a home loan?
Knowing what credit score advice these three agencies offer is important–it’s good to think like a lender when applying for a large line of credit, and it is even better to think like the credit reporting agency in terms of what to do to prepare your credit ahead of your loan.
What does Experian say about getting your credit ready for a home loan?
Their official site reminds consumers that credit scores are a very important aspect of home loan approval. But those scores do NOT tell the entire story.
Experian reminds us that lenders will have a good look at your credit report.
Your scores may be acceptable to the lender, but those who have declared bankruptcy or have had a home foreclosed upon may find the lender is not willing to approve a mortgage in such cases unless enough time has passed and other qualifying circumstances are present.
And what about credit use and payment history in your credit report? Equifax advises, “making on-time payments can help raise all your credit scores, while missing payments could hurt all your scores.”
The credit reporting agency has some specific advice to those looking for home loan approval–you can take these Experian-recommended steps to improve all your credit scores;
- Pay your bills on time.
- Pay down credit card balances.
- Don’t apply for other types of credit in the months leading up to your new home loan application.
You should also be saving for as much down payment as you can afford as well as for closing costs and other home loan related expenses.