Step 1: Know Your Credit – The first step to Homeownership is knowing if you qualify and where you stand financially. Start off by pulling your credit report from all 3 credit bureaus. The 3 major credit bureaus are Experian, Equifax and TransUnion. Each credit bureau has its own unique score and report detailing your credit history. This report provides the lender with information on how likely you are to pay back creditors in which you borrowed money from in the past.
Don’t have a lot of credit history. Use your rental history. Some landlords will report your credit payment history to the bureaus, if asked. They most certainly always report an eviction. Why not let them report positive payment history to help build your credit? This will work in your favor.
Once you have your credit reports, begin to comb over the report reviewing it for inaccuracies, negative credit reporting such as late payments, unpaid balances and /or unauthorized credit inquiries. Dispute any errors. If you have a late payment on an account that you normally pay on time, call the creditor and see if they would remove the negative reporting from your credit report. Pay your bills on time to increase your credit score over time. Do not max out your credit cards or have balances more than 30% of the limit.
Bonus Tip: What is a good credit score?
Generally speaking, a good credit score is anything above 700. However, you do not need to be over this number to qualify for a Home Loan.
According to Credit.com, “Most credit scores – including the FICO score and the latest version of the VantageScore – operate within the range of 301 to 850. Within that range, there are different categories, from bad to excellent.”
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: below 600
The Federal Housing Administration requires a minimum credit score of 580 with a 3.5% down payment, and major lenders often require at least 620, if not more. Of course, there are other factors like your debt to income ratio and employment history. Every lender has their own guidelines and underwriting process when determining your ability to qualify for a home loan.
For more information please follow me on Instagram @thetasheamcdougaldteam or Call/Email my office if you need a Lender and/or Credit repair Specialist at
(518) 210-2575 or
[email protected].
