So you are ready to take the plunge and apply for a new mortgage loan? Great! Congratulations on making the decision to become a homeowner. With low interest rates, tax advantages, and a host of other benefits that come along with purchasing a home you have about a million reasons to break free from the shackles of renting.

You can set yourself up for success during your entire home buying experience by knowing what to expect ahead of time. Most importantly, you should be sure that your credit is in tip top shape so that you can qualify for the most attractive rates and terms available on your new mortgage. Check out these 5 steps to help you get started.

1. Check Your Credit

There’s nothing worse than filing out a mortgage application only to find some unwanted “surprises” have shown up on your credit reports. Unfortunately, this is a very common problem. However it doesn’t have to be since you can access your own credit scores and reports online 24/7. Plus, contrary to a popular credit myth, checking your own credit does NOT harm your credit scores whatsoever. CLICK HERE for a list of great resources where you can access your 3-bureau credit reports and scores. Finding out what is on your credit prior to your loan application should definitely be the first item on your “to do” list during the home buying process.

2. Dealing with Surprises

If your credit reports were all 3 squeaky clean when you checked them in step 1, then skip down to step 3. However, if you found errors or blemishes on your credit reports then you may have some work to do before applying for a mortgage.  Remember, you have the right to dispute inaccurate and unverifiable accounts with the credit bureaus. You can dispute accounts on your own, but you also have the right to work with a professional who can typically get the job done more quickly and often with better success. CLICK HERE to schedule a no-obligation credit analysis to develop a professional plan to help you work toward a cleaner credit report.

3. Optimize Your Scores

Even if you have no errors or derogatory items on your credit reports (i.e. collection accounts, charge-offs, tax liens, judgments, etc.), it may still be possible for you to improve your credit scores. Take a long hard look at your credit card balances. Paying your credit cards down to $0 can potentially have a very BIG impact upon your scores. (CLICK HERE to read “The Perfect Credit Card Balance.”) Can’t afford to pay off all of your credit cards? You still have options. Paying down some of your cards to zero can still be beneficial to your credit scores. Plus, you can always consider a DEBT CONSOLIDATION LOAN to transform that score-lowering credit card debt into much more credit score friendly debt – an installment loan.

4. Avoid Mistakes!

When preparing to apply for a mortgage, you need to be a credit boy scout. You don’t want to make any credit mistakes which could result in lower credit scores and a loan denial. Some of the most common mistakes you will want to avoid include making late payments on existing accounts, charging up your credit card balances, opening new accounts (that new car loan needs to wait!), and having your credit report pulled excessively by lenders.

5. Monitor Your Credit Scores

There is no better time to keep a close eye on your credit scores than while you are preparing to apply for a mortgage. However, with so many credit monitoring options available, it can be difficult to choose. Keep in mind that a credit monitoring service which allows you to keep an eye on just one credit bureau and one credit score is not going to be enough. After all, when you apply for your mortgage the lender is going to take a look at all 3 of your credit scores and all 3 of your credit reports – Equifax, Trans Union, and Experian. CLICK HERE for a list of several different 3-bureau, 3 score credit monitoring services to see which one is the best fit for you.

Buying a new home is an incredible and exciting experience. However, credit problems during the mortgage application process can often turn what could be a wonderful experience into a nightmare. Follow these 5 steps above and set yourself up for mortgage success. It can be tempting to take shortcuts, but putting in the work on your credit ahead of time will pay off every time.


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Michelle Black is an 12+ year credit expert with HOPE4USA, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE Facebook page by clicking here. 



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