When a first time home buyer considers applying for a home loan it’s often the trigger for considering their credit score. Will the score qualify for the loan they want? Are there simple things they could do to get a better score and therefore get a better interest rate?
Well these are good questions but ideally they are being asked earlier than just before applying for a loan. It is best to see a credit expert well before filling out a loan application. In fact it’s a good idea to get help with this process months ahead of applying for a loan if possible. Most people wait until they have been turned down for a loan or they got a shock when approved for a loan at an interest rate that is higher than they were expecting.
When a lender makes an inquiry about an applicant’s credit it can lower the applicants score. It is best to inquire about your own credit in a way that does not lower your score. That way you can be educated and prepared before talking with a lender. Talking with a credit expert at this early stage is a great way to not only be prepared and know what to expect but it also provides an opportunity to make any changes needed. Sometimes very simple things can trigger rapid changes in credit scores.
With guidance from a credit expert a potential home loan applicant can pull their own credit report without lowering their score and get assistance from a credit expert who can guide them through the report. They can learn what problems and opportunities exist before ever talking with a lender.
Shelly Mull, Co-Owner of Credit Expert, LLC told us, “Most consumers don’t know how to interpret their credit report. A good credit expert can help them not only understand what they are looking at but can also show them the opportunities right in front of them.”
Common credit mistakes people make before attempting to get a home loan include opening large credit lines or allowing the amount of debt on credit cards to mount up. Shelly said, “I recommend people wanting to buy a home to keep their credit card balances below thirty percent of the available credit. A zero balance would be even better.” Most people don’t realize that balances over 30 to 50 percent of the available balance can start lowering their credit score.
Also opening a large line of credit could lower a potential home loan applicant’s credit score. This is a common mistake because most people have heard that more creditors reporting to the credit agencies is a good thing. So they reason that adding more will help improve their credit profile. But this is often not the case. Credit scores can be more about striking a precise balance than about adding more of something.
It turns out that even paying old collections accounts can be something that can be a negative on a credit score. “I have a strategy to paying these. People just pay them because a lender told them to and sometimes they are disappointed to find that their score actually went down from doing this.”
You can contact Shelly and her team at Credit Expert LLC by calling (605) 271-8871 or by visiting: http://www.creditexpertllc.com.