Check your credit before house hunt begins
around for the best price comes naturally to most consumers. Comparing prices
on, say, the latest plasma TV is mostly a matter of doing some research, hitting
a few stores and sharing info with friends and family.
home loan rates, however, that guy down the street may wind up being quoted a
lower or higher percentage than you -- even for the same exact loan from the same
are different interest-rate tiers based on your credit score," explains Kurt
Sorensen, a client services manager at True
Credit, a division of credit bureau TransUnion. So making sure your credit
score is as high as it can possibly be gives you your best shot at your lowest
Sorenson's a good
example. When purchasing his own home, Sorensen checked out his credit report
first and found a few items were working against him. After clearing up some inaccurate
information, he was able to boost his credit score by 40 points and qualify for
the lowest interest rate available.
Loan director Thomas Donnelly of
Seymour, Conn.-based Cross
Country Lenders, has seen it time and time again."Good
credit can virtually open every door for a prospective buyer."
Yet incorrect, incomplete or outdated
information appearing on a credit report is not all that uncommon.
That makes it all the more important as a first step in the home
buying process, in which a higher interest rate can well be the
difference between affording a home or not. Because mistakes aren't
corrected overnight, experts recommend checking your credit as early
That means getting a copy of your
credit report two to three months before you're ready to start looking,
says Maxine Sweet, vice president of public affairs for the credit
"If there is anything that's a surprise, it gives you time
to deal with it."
What if that time period has already
passed and you're actively shopping for your dream home? Better late than never.
Creditors generally have 30 days to update incorrect records. That may well be
enough time to iron out any credit wrinkles.
for a pre-purchase credit investigation? Here's how to do it.
Step 1: The credit check
Get a report from each credit bureau -- Equifax,
TransUnion and Experian.
To save time, look for services that provide all three reports instantly
online. An annual free
credit report will soon be available to every American but if
you are not yet eligible, this is not the time to skimp; pay for
a blended credit report that also provides your credit score, so
"you know where you stand" in the mortgage game, Sweet
Products such as TransUnion's Know
Your Loan Rate go a step further by using income, debt and credit
report data to determine what type of mortgage rate to expect. "This
gives you kind of a stepping stone -- the national average rate
for someone at that credit level," says Nicole Lowe, a credit
education specialist at TrueCredit.
Step 2: The accuracy scan
Examine every item listed on your credit report to ensure it's an
accurate reflection of your credit history. Are debts correct and
current? Do they truly belong to you and not a family member, someone
at the same address or someone with the same name? Are there suspect
creditor inquiries or other evidence of fraud? Did any reportedly
late or missed payments truly (or at least likely) happen?
A couple of months before Moira and
Keith Cotlier started looking at a Connecticut home, they checked on their credit
report and saw that their electric company had reported a late payment. "It
hurt our rating," says Moira, who was certain the item was a mistake.