How to Prepare Your Credit for a Mortgage Application
One of the most expensive loans that a person will ever take out is a mortgage loan. In applying for a mortgage application, a person’s credit score counts a lot. As a result, getting your credit sorted out for a mortgage application is a good idea.
It is important to realize that the higher the amount of money that a person will borrow for their mortgage, the higher the risk the lender will incur. Mortgage lenders evaluate the risk of providing you a loan based on your credit score. Essentially, the higher the credit score a person has, the less risk the lender will feel and vice versa.
If the lender feels that a loan is less risky, this will mean that the applicant will probably get better terms on their mortgage, better interest rates and etc. Below are a few things a person can do to prepare their credit for a mortgage application:
During the process of mortgage loan evaluation, a lender will evaluate all of a person’s credit reports from the 3 major credit bureaus. If there are any skeletons in a person’s credit history, they will all be exposed, even if these “hiccups” in a person’s credit history occurred several years ago.
In order to weed out any skeletons and get rid of any risk in your credit report, a person should be honest on their mortgage application. In addition, a person should contact the three credit bureaus to resolve the issues and ensure that they do not cause a problem in the mortgage application process.
Clear Any Errors in the Credit Report
Before applying for a mortgage application, it is important to clear out any errors on the credit report. Sometimes, there are errors that are made on credit reporting because all three of the credit bureaus do not co-ordinate with each other.
These errors can cause a person’s credit to be affected greatly if not checked. As such, the credit report should be verified for any inconsistencies or errors. If an error should arise, it should be disputed.
Make Timely Monthly Payments on Loans
In the process of a mortgage loan evaluation, a person’s current credit will also be tracked to see how their credit remains throughout the process of evaluation. As such, it is very necessary to ensure that all the monthly payments on a person’s credit cards and loans are paid on time.
Following this advice will help you prepare your credit for a mortgage application. Remember, the better the credit score, the better the terms of your mortgage.