Before you think of buying a new home, it is necessary to determine if your credit score is in excellent shape; when reverse is the case, your dream of owning a new home might dash to pieces.
Having a good credit score will always work in your favor since you wouldn’t have issues getting your mortgage approved. A bad credit score, on the other hand, does more harm than good.
As you try to find your way around the home buying experience, here are some credit mistakes you probably should avoid.
- Forgetting Your Credit Reports
When you apply for a mortgage or seek a loan from a lender, what they often go through is your credit report. It will enlighten them on your financial capacity, and also stir their decision.
Since they will be looking at this credit report, you must know what’s there before you sit with your bank or lender.
You can pull out your credit reports from one of the major credit bureaus like Equifax, Experian, and TransUnion.
- Late Bill
Aside from your credit report, another mistake you shouldn’t make it paying your bills late. It can be a glaring red sign, and lenders don’t like late bills.
Although your credit score is a huge factor, your payment history is also something that is hardly ignored. That is because it shows how financially responsible you are.
When you make a late credit loan or, perhaps, student loan, it shows you can’t keep up with your bills.
- Going On A Shopping Spree
A new home entails shopping for some home appliances, furniture, and lots more. But wait, you don’t have to dabble into that just yet.
When you max out your credit card or maybe open some new credit accounts, it could hurt your credit score, which can be saddening.
It would help if you didn’t make any substantial financial moves to avoid making a mistake.
- Falsely Disputing Negative Items On Your Credit Report
You are eligible to dispute some inaccuracies in your credit reports, such as charge-offs and late payment.
However, do this only when you’re convinced that the information is inaccurate. If there were indeed an error, it would take your credit bureaus about 30 days to ratify the issue.
If there were an error, the negative mark would be erased almost immediately.
- Accepting Bad Loan Terms Due To Poor Credit
It is one of the biggest mistakes you shouldn’t make since it never plays in your favor. As much as you need your new home, you shouldn’t get it under a bad credit score.
That will only mean lousy loan terms, higher interest rates, and high monthly payments. No matter how tempting it might be, resist the urge to acquire a loan using a bad credit score.
Conclusion
Many people have made these credit mistakes when buying their first homes. But if you can avoid it, it makes everything less hostile and manageable to pay off. A good credit score is vital for lasting peace of mind.