If you are thinking about purchasing a home for the first time, bear in mind that your credit will be one of the key factors in determining whether or not you are approved for a mortgage as well as the mortgage interest rate you qualify for. Your credit score is calculated using five major factors:

• Payment history – Creditors will look at your record, including payment history on utility bills and payments on loans or credit cards, to understand how you have handled your financial obligations over the years.


• Amount owed – This is the amount of outstanding credit card or loan debt.


• Length of credit history – A reflection of the length and age of each credit line on your credit report.


• New credit – Creditors will make note if you have opened new credit cards or taken out any loans recently.


• Types of credit used – This refers to your ability to manage a mix of credit, such as credit cards, auto loans or student loans.

Before you begin the homebuying process, request a free copy of your credit report and check for errors, which can have a negative effect on your score. If you see any errors, be sure to dispute them. Additionally, paying off outstanding debts prior to submitting your application may have a positive impact on your credit score.

Once you have applied for a mortgage, avoid opening new credit accounts such as credit cards or auto loans until your home has closed. You will also want to keep the balance low on any current credit cards. I would love to meet with you and have a conversation about your financial goals and your future home purchase. Call me today!