How To Clean Up Your Credit Before Buying a Home

By JP Fluellen

JP became a licensed real estate agent in 2010 after being a real estate investor for 2 years. He’s been a top real estate agent at Coldwell Banker The Property Exchange and has recently started the Titan Real Estate Team at eXp Realty.

When preparing to apply for a mortgage, many potential homeowners overlook a critical aspect—their credit report. Understanding what’s on your credit report is essential not only for securing a mortgage but also for ensuring favorable terms. Today, I’ll share some insights on what to watch for on your credit check before submitting your mortgage application.

It’s surprising how many of us don’t regularly review our credit reports, yet they play a crucial role in financial transactions, especially when applying for a mortgage. You might discover entries from long ago still lingering on your report. For instance, I once found a charge from an unreturned video rental from years back! While it may sound minor, even outdated information can impact your credit health.

Errors or outdated information can affect your debt-to-income ratio, a key factor lenders consider when evaluating your mortgage application. For example, a client of mine had an issue where a car he had sold months ago was still listed as under his ownership, implying ongoing payments. Such discrepancies can negatively impact your mortgage approval process.

Credit reporting agencies might not receive regular updates from creditors, including those for significant purchases like vehicles or recreational equipment. It’s crucial to check that any major debts or changes have been correctly updated and reported on your credit report.

Before you proceed with your mortgage application, take a moment to review your credit report thoroughly. Check for and resolve any inaccuracies or outdated information that might skew your financial profile. Doing so can significantly smooth out your mortgage process.

For more tips and guidance on navigating the home buying process, including how to handle your credit effectively, don’t hesitate to call or email me. I look forward to hearing from you!