How To Prep Your Credit To Buy A Home
Gresham Locals Looking To Buy Homes Need To Build Credit
One of the most important things to have in order as you prepare to buy a home is your credit score. Gresham home buyers should know that their credit score plays a huge role in being able to secure a mortgage. Conventional mortgage lenders will typically want a FICO score of at least 720, or in some cases 740, but those with a score above 580 may still qualify for an FHA loan.
In order to build your credit up to where you need it, try the following:
Review Your Credit Report
The first step Gresham home buyers should take, several months before they plan to get a mortgage, is to check their credit report for any issues. Checking two to three months in advance should suffice if you generally pay your bills on time. This leaves you time to correct any possible errors. However, if you have late payments or other derogatory items on your account, check six to nine months in advance.
Dispute Any Inaccuracies
Check closely for any inaccuracies on your credit report. For example, there may be an item you’ve paid for that is marked as unpaid, or an account showing up that isn’t your own. If this happens, file a dispute with the credit reporting agency.
Have Several Tradelines
Gresham home buyers will find that conventional loans require at least three tradelines (any combination of credit cards, student loans, car loans, and so on) that have been active within the past 12-24 months. FHA loans only require two tradelines. While it’s fine to have more, if you have fewer you won’t be able to qualify for a mortgage. If you need to open additional tradelines, try getting a major credit card like a Visa or a Mastercard at least six months before you apply for a mortgage and using it for items you would buy anyway. Never charge more than 30% of your allowed limit and be sure to pay it off in full when you get your bill.
Leave Older Credit Lines Open
Older tradelines actually help boost Gresham home buyer’s credit scores. Even if you don’t use them often, keep them open. Use those credit cards every few months and pay off the balance in full so those tradelines remain active.
Avoid Opening New Credit Lines
Don’t open any new credit lines within up to six months before applying for a mortgage, as this can temporarily lower your credit score. Because the credit bureau doesn’t know how you’ll handle the new credit, it is a risk factor.
Stop Buying On Credit
Gresham home buyers may be tempted to rush out and charge new appliances or furniture for a new house before closing. This is a bad idea. Having a debt utilization ratio above 30 percent right before closing could disqualify your loan. Unless you can pay cash, wait to purchase the new furniture until after the loan is closed.
Don’t Shuffle Money Around
When Gresham home buyers apply for a mortgage, you’ll find that you’ll need to provide several months of bank statements for your checking and savings accounts. Suddenly having large transfers between your accounts will show on those statements. Leave your money and accounts the same for at least 3 months.
Stonebridge Mortgage Group Offers Guidance On All Mortgage Matters
You can rely on Stonebridge Mortgage Group to help guide you through the entire home buying process. We can help get you pre-approved for a mortgage and assist with real estate loans and other mortgage solutions—both Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to get quality assistance with your home buying needs!
Call us today at 503.661.5580
