Keep an eye on that credit
We should all be aware of the reasons for tighter lending requirements by now – relaxed standards led to a number of risky, subprime mortgages hitting the market resulting in a slew of foreclosures. The response to those foreclosures involved a number of reforms generated by both the financial industry and the government.
The end result, of course, is that good credit is as important now as it ever has been for potential home owners wanting to take out mortgages. By the way, forget what you’ve heard about mortgages being next to impossible to get – they’re still out there in abundance, but lenders are taking extra steps to make sure that people who take them out will likely pay them back.
To that end, people wanting to take out mortgages should take steps to make sure they have healthy credit histories. One of the best things to do to take a look at any potential problems in one’s credit history is to go through a credit report.
Fortunately, the federal government has made it possible for consumers to pull their credit reports once a year for free through the Internet at annualcreditreport.com. The reports are from the three major credit reporting bureaus – Equifax, Experian and TransUnion. Want to pull your reports without having to go through the Internet? No problem. Just call the toll free number at (877)322-8228 and request copies of your reports.
Not only can you take a look at items that impact your credit, but you can see what items might be inaccurate. Debts that were paid in full and not reflected on your credit report and other bits of inaccurate information will be revealed by the reports and instructions on how to dispute those items is available with each report. It might be a chore disputing that bad information, but the bump in your credit score may make the difference between getting a mortgage at a great interest rate and getting a higher rate or no loan at all.
What are some items that can negatively impact your credit? Take a look at the following list:
? Payments to credit accounts that are at least 30 days late.
? High credit card balances.
? Credit inquiries from potential lenders.
? Newly established credit – lenders want to see a solid credit history and evidence the borrower takes care of debts.
? Too many credit accounts – lenders don’t want to see evidence that a borrower may be overextended.
? Judgments, tax liens, repossessions, foreclosures and bankruptcies obviously lower credit scores
Any of those items, whether they are accurate or not, should be addressed by anyone wanting to take out a mortgage.
Here’s another tip – should you get pre-approved for a loan and are out shopping for a home, don’t go out and get new lines of credit. Yes, a new car might look great in the driveway of your new home, but taking out the loan to buy it could hurt your credit report and reduce your chances of taking out a mortgage.
Should you have any questions about credit scores and how to increase your chances of taking out a mortgage, get in touch with a local mortgage banker. They are always happy to answer questions and help people achieve the goal of owning a home.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.