Prepare Your Credit For a Mortgage Loan

As the housing market heats up with summer approaching and more consumers considering buying a home, it’s important to consider how to prepare your credit to buy a house.

Conventional mortgage lenders will typically want a credit score around 700s, but those with scores in the 500s -600s may still qualify for a loan, your lender or loan officer will able to put you on the right program.

Below are some steps you can take to prepare your credit for a mortgage loan:

  • Review and monitor your credit report. View your credit report now!
  • Dispute any inaccuracies- Credit Recovery Group is here to help this process less of a headache.
  • Make sure you have several tradelines- Conventional loans require at least three tradelines that have been active within the past 12-24 months. This includes any combination of credit cards, student loans, car loans, etc.
  • Pay down debt –  Lowering your debt to income ratio will be beneficial when purchasing a home.
  • Leave older credit lines open- Older, more mature tradelines help boost your credit score, so leave those credit cards open even if you don’t use them all the time.​
  • Avoid opening new credit lines
  • Stop purchasing on credit- Buying new furniture and appliances for your new home could jeopardize your approval process. It is best to wait until your loan finalizes before purchasing anything on new credit.
  • Avoid making large purchases and taking out large loans. Save the car purchase for after you close on your mortgage loan.
  • Avoid shuffling money around from bank account to bank account- avoiding this makes the paperwork process less hassle.
  • Limit spending on unnecessary things and save money.
  • Avoid making late payments, being delinquent can cause your credit score to drop. Stay on top of paying your bills on time.
  • Have you seen your credit score decrease? Here are 5 reasons why your credit score may have dropped.