If everything we’ve told you so far has not deterred you from your desire to buy a home — that’s great! Now we can move on to some of the things you can do to increase your chances of making the transition into homeownership a smooth one. Let’s start with one of the most important factors lenders consider when you apply for a home loan.
Focusing On Credit
Creditworthiness is a function of both your ability and willingness to repay. That’s why lenders put so much emphasis on it and why you should, too! If you know that you have good credit-congratulations! You’ve got a big head start on obtaining a home loan. If your credit is less than stellar, you’ll probably have to work a little harder to obtain a loan. Either way, it’s a good idea to obtain a copy of your credit report before applying for a mortgage. That way you can be sure of what your credit is saying about you and avoid any unpleasant surprises during the loan process.
Once you receive your credit report, review it for accuracy. If you find any mistakes or outdated negative information (in most cases, that’s anything older than seven years), contact the credit bureau to find out what you can do to have the error corrected.
Repairing A Bad Credit Record
So what if your credit doesn’t look so good? Is there any way to get rid of negative information, even if it’s true? The answer is, NO! Unfortunately, there are scam artists everywhere-especially in the credit repair industry-that would like you to believe otherwise. Don’t be misled by promoters who claim they can magically repair your credit. The truth is, the best way to improve your credit worthiness is to immediately begin establishing a record of paying your bills on time.
Establishing A Non-Traditional Credit Record
What should you do if you’ve never had a credit card or installment loan? Don’t panic — there may still be a way for you to prove your creditworthiness. With some lenders, you can build a nontraditional credit history by documenting your monthly rent payments as well as payments to utility companies for electricity, gas, water and telephone services. Check with the lender you’re dealing with to find out if they will consider this type of information as proof of your creditworthiness.