When you start thinking about buying a home, the first thing on your to do list, after deciding to take on this new adventure, is checking your credit scores, all three of them. Two may be fine, but the third one, if it’s low, may keep you from getting a loan or cause the loan rate to be much higher than you were expecting. And this could just be a silly mistake or one that might be easily fixed, but you have to fix it first. Your credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a home loan and what your loan terms and percentage will be .The higher your credit rating the lower your loan rate will be. So, here are a few things to remember before you begin the home ownership process.
1. Look for any errors in your credit report. Mistakes can happen, and you could be paying for someone else’s poor financial management. Get these mistakes fixed pronto!
2. Pay down credit card bills. If possible, pay off the entire balance every month or at least make a payment that is more than the minimum required. And transferring one credit card debt from one card to another could also lower your score. So don’t play around with this either!
3. Don’t charge your credit cards to the maximum limit, enough said!
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4. Wait 12 months after any of your credit difficulties to apply for a mortgage. You’re penalized less for problems after a year, so wait it out!
5. Don’t pre-order any items for your new home on credit — such as appliances, furniture, frill or doo dads — wait until after the loan is approved and your rate is locked in. Any amounts you spend now will add to your debt to income ratio and will affect your loan percentage rate, really! 
6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score. I know it sounds silly, but the more you have isn’t necessarily better in this case!
7. Shop around for mortgage rates all at once. Too many credit applications can lower your score, that’s why we said earlier not to open any new credit accounts. But multiple inquiries from the same type of lender, banks and mortgage companies, are counted as one inquiry if they are submitted to the credit information centers over a very short period of time. So don’t hesitate to shop around for the perfect rate and terms, you have to live with this for a very long time!
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management. This is a red flag to most loan officers that you had to take out a loan to help pay off too much credit!
Equifax, 1-800-685-1111, www.equifax.com
Trans Union Corporation, 1-800-916-8800, www.transunion.com
Experian, 1-888-EXPERIAN, (397-3742), www.experian.com
FYI: This information is based on the Fannie Mae Foundation’s ‘Knowing and Understanding your Credit’.
