Prepare Your Credit Before Buying a Home

Buying a home--especially for the first time--makes significant demands on personal credit. Before you begin the process of shopping for a loan, it is important to understand how your credit may be viewed and affected--before and after your mortgage is approved.

Credit Scoring

A home loan requires a solid credit rating. Considering that a mortgage is probably the single largest loan that an average person will take out in their life, lenders have established certain criteria for choosing mortgage loan candidates and for granting such loans. Creditor--especially those in the mortgage industry--frequently use the what are known as credit scores when deciding who receives loans. They can order your score, commonly called a FICO score, from one of the bureaus. The score is computed using information contained in your individual credit report. Creditors often also consider other information, such as your salary or how long you have been employed at the same company, when making loan decisions.

Changes to Your Credit Profile

Once a home loan takes place, it can dramatically change some credit dynamics. A mortgage is a large loan, and may impact things like your debt-to-income ratio in the first years of the loan. On the other hand, homeowners build equity--an asset that contributes to their net worth-with each mortgage payment. They also establish another level of credit history and stability by making their mortgage payment on time.

A 3-Agency Credit Report Can Provide the Information You Need

The triple merged 3-Agency Credit Report includes comprehensive information that can help you prepare for your mortgage application process. Most mortgage lenders pull all three bureaus' reports as part of the pre-qualification process. Many financial experts recommend viewing these three reports well in advance of even applying for a mortgage. Our 3-Agency Triple Merged Credit Report can provide all three bureaus' reports in one comprehensive format.