Credit History

The very first thing a prospective buyer should do is to examine their credit report. Why? Because your credit score can affect your interest rate, the minimum down payment amount, and the number of available loan products offered to you. The reason for these stricter guidelines is that a lender may associate a low credit score with a higher risk potential for missed mortgage payments, and they might charge you more to offset the possibility of future losses down the road.

You can obtain a free credit report at AnnualCreditReport.com, but you will have to pay to see the credit score. You want to look for accounts that you might not have authorized, a late payment history that’s not accurate and needs to be corrected before applying for a loan, and unauthorized, unpaid charges that might have been made by a disgruntled significant other. Once you have all that straightened out, make an appointment to speak with a loan originator at your bank. If your score still needs some improvement, they can recommend ways to raise it. But this won’t happen overnight. So plan ahead and start this prep work early in the process.