When you apply for a mortgage, one of the first things a lender will look at is your credit score. No single piece of credit information determines your score, but a variety of data in your credit report is used to calculate this critical number.
Important Credit Score Factors
• Amount of time since accounts were opened
• Number and type of accounts with balances
• Proportion of current balances to credit limits
• Number of late payments over 30 days past due
• How long delinquent accounts were past due
• Bankruptcy, judgments, liens, collection accounts
If you are planning to buy or refinance a home in the near future, there are certain things to avoid during the months prior to applying for a mortgage that can reduce your credit score.
Before Applying for a Mortgage:
• Do not apply for any new credit cards before getting a mortgage
• That includes not opening new accounts to transfer credit balances
• Avoid running up credit card balances, but reduce them instead
• Don’t buy a vehicle that requires getting new a loan financed
• It is not a good idea to close any accounts with or without a balance
• Do not allow any payments to go over 30 days late or to collection
If you find any errors on your credit report, you are entitled to dispute the accuracy and have them removed. Your dispute must be investigated by the credit reporting agencies within 30 days of when you report the error. If the derogatory information cannot be confirmed by the reporting source during that time period, the item must be removed from your report, which may boost your credit score.
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