Credit and Homeownership

If you're thinking about buying a home, you should be thinking about your credit first. Understanding your credit is the first step when considering homeownership.

When you apply for a mortgage, lenders will review your credit report. Your credit report is a history of how you've managed your finances: it's a record of money you've borrowed, your history of paying it back, and how much open credit is available to you. Many individuals do not understand credit reports or what their own credit report says. Educate yourself about your own credit before you even begin thinking about buying a home. If you find any errors, fix them immediately. Remember, with good credit, you can borrow for major expenses, such as a home, car, or education, and you can borrow money at a lower cost—ultimately saving you money.

Your credit history follows you wherever you go, and it will have a big influence on your ability to get a loan, the terms of that loan, and the interest rate. If you have good credit, you may have more mortgage options with lower rates.

So how do you better understand credit?

• Be aware of how important your credit history is to the homebuying process. Establish good credit and protect your credit.
• Look at your credit report and credit scores.
• Make sure you correct any mistakes on your credit report right away.
• Find a reputable credit counselor to assist you with any credit issues.