Chapter 1

PRELIMINARY FINANCING HOW

MUCH HOME CAN YOU BUY?

Step 2:

Take a close look at your credit report.

Your credit history is one of the principal measures used by a lender to determine your interest rate. The better your credit, the better lending terms your bank or lending institution will be able to offer you. A higher interest rate translates into a higher monthly mortgage payment, and so your credit score will directly affect how much money you can borrow and at which homes you should be looking.

 

You should be aware of what information is on your credit report by obtaining and reviewing copies of your credit report from the three main credit report agencies.

Equifax

equifax.com

1.888.766.0008

   TransUnion       

transunion.com 

1.800.888.4213   

HOW DOES YOUR SCORE RATE?

     Low          Fair         Good      Great   Exceptional

Below 620      620-690      690-740      740-780     Above 780

WHAT NOT TO DO

If at all possible, you should avoid making a major purchase or changing your job if you're seriously considering buying a home in the next few months. This may negatively effect your credit score.

The average credit score in the United States is 695. (December 2019)

Remember that there are several factors that affect your credit report including your payment history, your current ratio of debt to income and signs of responsibility and stability. And since not all creditors report to all three agencies, it's best to order a report from all three institutions. Your goal in ordering all three credit reports is to make sure that all of the information stated on each report is accurate and correct.

 

If there are any discrepancies on your credit report, it's important that you contact the rating agencies and have those records corrected. This will help you avoid hassles later on.

Page 2  Chapter 1

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