One of the first things every buyer should do when purchasing a new Bexar County home is to check on their credit. Before you even begin the process of applying for a home loan, you should request a copy of your credit report from all three credit reporting agencies: TransUnion, Experian and Equifax. It is important to obtain your credit report from each credit agency, as information contained in each of these reports may differ.
Once you have ordered copies of your credit report, make it a point to read through them carefully and thoroughly and to correct any mistakes or discrepancies. Also located on each credit report is your credit score. Generally, a good credit score is anything over 700; however, what do you do when your credit score falls short of this number? You may be quite confused by your low credit score but, in reality, there are a few things that can have a dramatic effect on your credit score:
- Student Loans – Student loans are government loans that should be taken seriously; however, many graduates fail to realize the importance of paying on these loans. As a result, many would-be homebuyers find themselves unable to secure a loan because of bad student loan debt.
- Utility Bills – Did you know that your utility company can turn you into collections for not paying your gas, electric, water or phone bill? Many people are unaware that their payment history for their utilities is carefully noted in their credit report. Keep in mind that your ability or inability to pay your utility bills on time each month can have a huge effect on your credit score.
- Too Much Debt – Regardless of whether you pay your bills on time each month, your credit score will take a hit if you have too much debt. Often referred to as a debt-to-income ratio, many creditors views this ratio when determining your credit worthiness.
- Not Enough History – A lack of credit history can prevent you from securing a home loan. This may sound odd but, in reality, creditors must be able to determine if you are a good credit risk, and the only way to do this is to view your credit history.