You have been watching the Charlotte real estate market over the last several years and realize that you really want to buy a home. Interest rates are still very low, inventory levels are plentiful and prices remain reasonable. It's the perfect time to buy a Charlotte NC home. But, what is your credit score like? Before you scan through the MLS, you should learn more about how your credit score affects your ability to purchase a home.
Your credit score is what mortgage companies look at to determine whether you are a good candidate to lend money to. If you have a high credit score and have used your credit responsibly, you are a good "risk" (you are more likely to pay back the loan, something the loan companies want to hear). However, if your score is not optimal, you are a less desirable risk and will have to pay the penalty for this with a higher interest rate. If your credit score is really low, you may not be approved for a home loan at all.
When you decide that you want to purchase a new Charlotte home, contact all three of the credit reporting agencies (Equifax, Experian and TransUnion) to obtain a credit report. According to law, you are allowed one free report per year from each agency. Go through your credit report meticulously to spot any errors that may occur. This happens more often than you would expect.
Each credit reporting agency uses their own algorithm to determine your credit score. So, while you have excellent credit with one agency, the other two may put you in a slightly lower category. Contact the credit reporting agency about any and all errors you find. Provide any proof you have that these particular discrepancies are erroneous. This can take time and require a bit of patience on your part. However, if you really do want to get the best possible rate for your next Charlotte home, it is worth the effort to clean up your credit where you can.
Beware of scams. Unfortunately, there are credit repair companies out there looking to take advantage of people who want to clean up their credit. You can protect yourself by learning what to look for. The Federal Trade Commission has an information page that gives you guidelines on what to watch out for in a scam. You can view this information here.
Purchasing a new home doesn't just involve the search. You also need to know how your credit score affects the home buying process. Make sure to get a copy of your current credit report from each of the three credit reporting agencies, search for errors and contact the appropriate agency about any mistakes. Clearing up issues on your credit can mean the difference between getting a prime interest rate on your new Charlotte home and paying several thousands of dollars in extra interest over the life of your loan. If you ever need help with any Charlotte real estate, please feel free to contact me.