The better your credit score, the better your mortgage offers will be! It pays to get your credit in the best possible shape before you apply for a mortgage.
Get a free copy of your credit history at annualcreditreport.com. If you see errors, notify the reporting bureau right away. Your credit score is available through MyFico.com; fees apply. Some credit card issuers provide free access to your credit score as part of their services.
There are 3 major credit bureaus and not every creditor reports to all of them. You may have 3 different credit scores as a result. Lenders consider the average of these scores when determining your creditworthiness.
There are several factors considered in your credit score.
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- New credit: 10%
- Credit mix: 10%
Mortgage lenders want to see a history of consecutive, on-time payments. And the less outstanding debt you have, the better! Your debt levels not only affect your credit score, but they also affect your debt-to-income ratio. The more consumer debt you carry, the less room your monthly budget has for a mortgage payment. Ask me for a referral to excellent mortgage lenders!