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Determine your credit status and ability to obtain a mortgage
Getting a copy of your credit report early in the
process is an absolute must. Most mortgage companies will obtain and
review an “in-file” credit report, with information merged from at least
two of the credit repositories, generally at no cost to you as part of a
mortgage pre-qualification. This certainly is a quicker, easier and less
expensive means by which to check out your credit.
However, one important factor to consider has to do with
credit scoring. One such system is known as the “Fair Isaac Corporation
(FICO) Credit Score”. This is an automated credit scoring system using
software developed by the Fair Isaac Corporation in San Rafael,
California. The software analyzes your credit, places you into one of 10
scoring models and calculates a score based on the number of accounts,
type of accounts, number of credit inquires and much more. When a lender
obtains a copy of your credit file an inquiry is posted on your file.
This will usually lower your credit score. And if you have several
lenders inquire your score will be lowered even further. However, when
you obtain your credit report directly, your score isn’t lowered.
You can contact all three credit repositories directly
to obtain a copy of your credit file. The cost varies with each.
Mortgage lenders pull credit information from all three as part of a
mortgage application. You should also. You can then make the corrections
you need and obtain a “clean” report from each. You can then make copies
available to any lenders for their review. Then only allow the final
lender you are going with to pull their own report. After you have
reviewed your credit reports you should have a good idea with regard to
problems and the need to clean up any inaccuracies in the reports and
whether or not you will need to seek alternative financing methods or
delay your home buying adventure.
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