How To Prepare Your Credit For A Mortgage

Tips To Boost Your Credit Score Before Applying For A Mortgage

If you are thinking about buying a home, preparing your credit could save you thousands of dollars when you apply for a mortgage. Although your mortgage application will include proof of your income and other financial information, your credit score is one of the most important factors that will be examined. Ultimately, your credit score has the strongest influence on your mortgage interest rate and which home loan program you qualify for.

This means that preparing your credit for a mortgage is one of the most valuable things you can do before you start thinking about potential neighborhoods, school districts, and home amenities. With a good credit score, you can qualify for a significantly lower interest rate on your Apache Junction home mortgage loan which can save you thousands of dollars throughout the life of your loan.

Check out these tips from your Chandler mortgage broker to put your credit in the best possible position before you apply for a mortgage.

Applying For Credit For A Mortgage in Arizona

Find Out Your Credit Score

It’s important to know that your credit score doesn’t have to be perfect in order for you to qualify for a mortgage. There are several home loan programs that allow buyers with credit scores as low as 500 to qualify for a mortgage. It’s also important to realize that lower credit scores generally mean higher interest rates because there is more risk to the lender. You’ll want to boost your credit score as high as possible for the best mortgage terms.

Before you get started with buying a home, find out what your credit score is so you know your baseline. Checking your credit score gives you an idea of your credit health so you know where to begin as you prepare your credit for a mortgage loan. You can request a free copy of your credit report from the major credit bureaus, Experian, Equifax, and TransUnion.

Avoid Large Purchases & New Debt

When you apply for a home loan, your Gilbert mortgage broker will help you make your credit look as good as possible. Taking out new debt typically means a hard inquiry into your credit, which can hurt your credit score by lowering the average age of your credit accounts. Adding significant debt will also affect your debt-to-income ratio, which reduces the mortgage amount that you qualify for, and can further reduce your credit score. New debt and large purchases will leave your lender wondering if you will be able to afford your monthly mortgage payments.

Pay Your Bills On Time

Developing a history of paying your bills on time, including rent, utilities, student loans, credit cards, and other debts, will boost your credit score and also make your mortgage application more enticing for lenders. This requires months or years of consistency, so it’s important to make paying your bills on time an important habit before you start thinking about buying a home. Late payments mean red flags on your online mortgage application and can lead to your application being declined, or approved with a higher interest rate.

Reduce Your Credit Card Debt

Most Americans carry significant amounts of credit card debt, but one of the best ways to increase your credit score is by paying down this debt. Ideally, keep your credit utilization rate below 30% of your available credit.

Dispute Inaccurate Credit Reports

One of the reasons why it’s important to get copies of your credit report is to ensure that all of the information is accurate. It’s not uncommon for credit reports to contain errors that work against you. If you notice a mistake, file a dispute with the credit agency so that it can be removed or resolved. In most cases, it will take at least 30 days for the credit bureau to investigate your claim, verify the error, and get it corrected, so make sure to start this process in advance of your home loan application. Once the error is resolved, you may notice an increase in your credit score.

Get In Touch With An Experienced Mortgage Broker

Preparing your credit for a mortgage application can take some time and effort, but it’s worth it for the money that you will save in the long run! Contact an experienced Chandler mortgage banker to learn more about how to improve your credit, explore home loan programs and requirements, and discover how to put yourself in the best position to approve your mortgage application.

Are You Ready To Buy A Home?

If you’re ready to talk about homeownership, contact the trusted team at KHoward Mortgage Team. We are one of Arizona’s leading mortgage brokers with decades of collective experience in the industry. Our agency offers a full selection of home loan options, including FHA, VA, conventional loans, and much more, so you can find the right program or financing that meets your needs. We promise to provide clear, consistent communication and will be there to support you from start to finish. Let us help you move into your dream home! Contact our office today to get started.


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2913 N Power Rd #108
Mesa, AZ 85215

Phone: 480-442-8834