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.
Creditors--especially those in the mortgage
industry--frequently use the 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-Bureau Online Credit Report can provide the information
you need.
The
3-Bureau Online 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-Bureau Online Credit Report
can provide all three bureaus' reports in one
comprehensive format.
Mortgage Glossary2
