Borrowers who start preparing for a mortgage loan long before they’re actually ready to apply for one are making a smart move. Starting early to identify any problem areas with your credit is a very wise thing to do.

Steps you can take today to get ready for that mortgage application tomorrow.

1. Study Your Credit Report.

Your first move should be to order your free credit report from You are allowed one free copy of your credit report from each of the three national credit bureaus — TransUnion, Equifax and Experian — every 12 months. Don’t order your reports from anywhere else. Other sites might try to charge you or provide their own reports rather than those from the big three bureaus.

Once your report arrives, study it carefully. Your report will list basic information such as your name and address. But it also lists your open accounts. If you owe $10,000 on a car loan, your report will list it. If you owe $5,000 on a credit card, that information will be there, too.

Your report will also list any negative collections, judgments, and public records against you. This could be something big, like a foreclosure or past bankruptcy filing. These sections will also list late payments on student loans, car loans, credit cards, and other debt. These negative judgments can all cause your credit score to drop.

If you find any errors — maybe you never did make that late payment on your car loan, or maybe you paid off and closed that credit card account years ago — make sure to ask for a correction. This is easier today: ExperianEquifax and TransUnion all let consumers ask for these corrections

2. Get Your Credit Score.

The information in your credit report is used to determine your credit score. Lenders rely on credit scores to determine the interest rates they charge consumers. And if your score is too low, you might struggle to qualify for a mortgage at all. Lenders today generally consider a FICO credit score of 740 or higher to be an excellent one.

3. Pay Down Your Debt

If you are using too much of your available credit, your score will suffer. Pay down as much of your credit card debt as possible before you’re ready to apply for a loan. But be careful. It often doesn’t make sense to completely close a credit card account. If you close a credit card — and take away that available credit — the percentage of your credit that you are using could automatically soar. Never close an account without discussing it with me first.

4. Pay Your Bills on Time.

The other big drag on your credit score? Missed or late payments on credit cards, auto loans, student loans, and other forms of revolving credit. Resolve now to never again make a late payment. Your score will gradually rise as the months of on-time payments pass by.

Extra Pro Tip:

Call us and we can go over all of this together. There are multiple things we can do to help you with your credit. You are under no obligation to buy a home now. If you buy in a month or 3 years from now, we will still be around to help you out.

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