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Your Credit Score and Mortgage Lenders: What Rural Homebuyers Need to Know

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Home > Education & Events > August 2019 > Your Credit Score and Mortgage Lenders: What Rural Homebuyers Need to Know
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So, after spending some time dreaming about it, you’re finally working towards your goal of moving to a small town or a house in the country. The process, while exciting, can also be intimidating. And nothing blows the wind from your sails faster than realizing you may not qualify for the home mortgage you need.

There are steps you can take before and during your home buying journey to help you set yourself up for a smooth voyage.

What a mortgage lender looks for:
When evaluating a home buyer for a mortgage, mortgage lenders rely heavily on credit reports. Your credit report is a snapshot and account history: the good, the bad, and the ugly. The information on your credit report can inform a lender’s a judgment about the likelihood of repayment. If you’re looking to improve your credit, here are a few tips.

Improving your credit score:
  1. First, visit www.annualcreditreport.com, to get a copy of your credit report from all three credit bureaus. You can get a free report from each them once per year.  Having a copy of each report will allow you to be up-to-date with any changes in your credit history and uncover any surprises so you’ll be prepared when you’re ready to apply for a loan. If the report reveals any errors that may not be yours, you can file a dispute.
  1. Credit reports can be intimidating, so make sure you understand what you’re looking at and verify
  • Your personal information (your name, address, telephone, etc.) is correct.
  • Your trade lines (i.e., credit lines) reflect accurate information about your creditor relationships This section shows available credit, balances, terms, any late payments, high credit card limits, past due amounts, opened date, closed date, and remarks from your creditor,
  • Your Inquiries. Every time you request credit or someone requires information about you for purposes of extending credit, it will show in this section. Never skip reviewing this section because if someone is committing fraud on your credit it will likely show they have tried to obtain credit using your name here.
  • Public records and collections. This will show any civil judgments, liens, bankruptcy, or any accounts that went to collections. 
  1. Clean up anything negative on the credit report and look for ways to improve.
  • Follow the process to dispute any errors or fraudulent activities.
  • Pay any past due creditors. If you are unable to pay the full amount, call the creditor. Most of the time they will work with you on repayment plan.
  • Pay off any account in collections. Once again, if you cannot pay the full amount, call the creditor. The majority will settle for a lesser amount or work out payment arrangements.*
  • Utilize your credit cards and accounts wisely.  If possible, pay off your credit card account in full each month.  However, if that is not possible, maintaining a 30% or less utilization on each line can positively impact on your credit score. If you have a credit card only use 1/3 or 30% of the credit card limit.
Maintaining a good credit is very important, but it doesn’t have to be intimidating. The secret is staying under 30% utilization on credit cards, fixing errors, and paying on time every time. Having good credit will help you get that dream home in the country or small town.
 
*Source: Transunion.com

This article is for informational purposes only.  Compeer Financial does not provide financial, tax or legal advice. 
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