Posts under 'MONEY MATTERS'

One of quickest ways to get “Unapproved” for the loan on your dream home is to do something that negatively effects your credit score during the home loan process. One of the first conversations we have with all clients (good or not so good credit) is notifying them to NOT make any major purchases while building or buying a home. That means NO new car, new boat, furniture, electronics, etc… until the loan is closed.

To better understand why or how this will effect you, I will give you an example of a client with good credit that buys a new car during the home loan process and the real cost of buying that new car. Oh, and the “Cost” I am referring to is not just the new payment.

1. Check your credit report at all three agencies- Equifax, Experian and Trans Union (checking your own credit is called a “soft-pull” and will not negatively affect your credit). Look for errors that may appear on your report. Each agency offers a place on their website to submit online disputes. They have 30 days to verify the information is correct or they will remove it.
2. Do NOT open new credit cards that you don’t need just to increase your available credit. This approach often backfires and will lower your score.
3. Keep your current account balances as low as possible. High outstanding debt will negatively affect your score since you will have a greater chance at missing a payment.

I have had the pleasure of working with a lot of home buyers looking to buy their first home or even their second or third home. I can’t tell you how many times I meet people who are ready and willing but not able. They have a steady job with a good income and by all accounts should be able to buy that new home. There is just one little 3 digit number getting in the way. Their credit score!

It breaks my heart to tell them that they will have to wait on reaching their dream but I will never leave it there. I love to encourage my homebuyers to take control of their credit score and make it work for them. It can be a 6 month process to get it under control but it’s worth it in so many ways.