San Mateo Mortgage Blog » Credit

When Should I Run My Credit?

Chris Williamson — Mon, 13 Jul 2009 23:46:06 +0000

Q: I am thinking of buying a house in the next several months to a year. I want to get an idea of how much I can afford, but my friend told me not to have them run my credit until I am absolutely ready to buy because my credit score will go down. Is that true?

What Could Happen if I Wait?

A few weeks ago, a client came in ready to buy a home. They had been pre-qualified several months ago by their bank and were told they could afford a $750,000 home. They had been out looking and found a house they really liked and wanted to make an offer. They came in with all their information and I ran a credit report. Low and behold, there were two collections on their credit report that were not theirs. In their case, their credit score had dropped below the acceptable level and they no longer qualified for the loan. They had to call all of the credit agencies and get the collections removed. Then once the collections were removed, I arranged to have a rapid re-score, which did bring their credit score back up to an acceptable level. However, during the time it took for us to correct their report, which can take several days, the house was sold to someone else. Had they come in when they started looking for a home and received a genuine pre-approval, they could’ve avoided this problem and purchased the house with no problem.

Are these Horror Stories Frequent?

No. Most of the time we see credit reports with correct information. However, for the people who have had incorrect information on their credit report, or for others who could fix a few minor things to improve their credit score, it is worth it to check it out in advance.

Will the Free Credit Reports Suffice?

The free credit reports are good for consumers to check once a year to monitor their credit. However, they aren’t going to go into as much depth as a credit report we run. So, if there is something buried deep in the report, you may not catch it. The free credit report is a good start, but when you get serious about buying a home, you should go in and speak with a Mortgage Advisor.

Will My Credit Score Drop Dramatically?

Running your credit can affect your credit score anywhere from 2-50 points. There is no formula and it really depends on your specific situation. You do get a two week window when you are shopping for a mortgage loan. Let’s say you go to three places within 14 days of your first credit inquiry and each run your credit. This counts as one inquiry to your credit score.

Bottom Line?

You should run your credit and get a genuine pre-approval when you start seriously looking to buy a home. This should be before you find the house you want to make an offer on, but doesn’t need to be when you first start looking at homes online. You have to be comfortable about running your credit and should be careful about who runs it and when it is run. We’re more than willing to arrange a consultation with you where we can give you the information and help you decide when it is best for you to run your credit based on where you are in the home buying process.

Curious About How Much You Can Afford?

Come in and see us, send us an email or fill out our secure mortgage application and we’ll help give you an idea of the type of program that would best suit your needs. We’ll also give you an idea about how much you can afford and what the monthly payment would be and you can decide the price range you are comfortable looking.

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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Mortgage Myth Busted: I Must Have Steller Credit to Buy a Home

Chris Williamson — Mon, 29 Jun 2009 21:19:09 +0000

Many people think they need to have stellar credit and no debt in order to get a home loan. That’s just simply not true. Different loan programs have different credit score qualifications. Some programs will accept credit scores as low as 580. For those of you who haven’t established credit, or don’t have an extensive credit history, other programs will even allow you to use alternative credit (rental history, utility bill history, etc) to qualify.

How Often Should I Check My Credit?

We recommend you check your credit score yearly. You can do this for free by going to www.AnnualCreditReport.com. At this site you can run your own credit report with each of the three credit reporting bureaus. Although the report will not be as detailed as our report because our report pulls a more thorough history, you will get a sense of where your credit is and if there are any errors. Running your credit at this site once per year will not affect your credit score and is a good way to keep tabs on your credit history.

What Should I Avoid When Thinking About Buying a Home?

Remember, even though you don’t need perfect credit to get a home loan, you should avoid large purchases like cars before and during the home buying process because large purchases may have a negative impact on your ability to qualify for a home loan.

Free Report: How Does Your Credit Affect You as a Home Buyer?

For our free 5 page report on your credit and how it affects you as a home buyer, please fill out the form below and it will be sent to your email immediately.

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Have Questions About Your Credit?

To discuss your credit score and its impact on your home purchase in further detail, please send me an email or give me a call at (650) 520-0915.

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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Free Credit Report

Chris Williamson — Thu, 02 Oct 2008 14:00:45 +0000

Since my last post, I received a numerous requests about how to receive a free credit report? Here are a couple of sites to check out:

These are great places to receive a credit report, but you need a credit report that will actually give you scores. Most companies will charge extra to show you scores. So the best site that I have found is www.Credit.com. This is one place that will send you a credit report and send you credit scores for free. However, you have to remember to cancel your memberships within their 30-day period, and you only receive one of the three bureau’s report. Not the perfect solution, but it’s free and it will give you an idea of where you stand.

I hope this helps!

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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The CIA of Lending: C is for Credit

Chris Williamson — Mon, 29 Sep 2008 14:00:56 +0000

We ended last week by talking about the CIA of the lending world. CIA standing for Credit, Income and Assets. As the turmoil in the financial markets continues, lenders require more from you as a borrower when it comes to your CIA.

The Centerpiece of Your Creditworthiness – Your Credit Score

As we explore the components of the CIA in detail, we will start by looking at the centerpiece of your creditworthiness, your credit score. Your credit score is the first impression you send to a San Mateo mortgage lender. Your credit score reflects how you handle debt and a great indication of how you will handle your financial responsibilities in the future. Your credit score can affect every aspect of your San Mateo mortgage. It can determine the mortgage programs available to you, the upfront costs to obtain a San Mateo mortgage and most importantly, the interest rate you receive. Not only does your credit score affect all aspects of your mortgage, but can ultimately be the deciding factor in your loan approval.

How Your Credit Score is Reported

Your credit score can range from 350-850, the higher your score, the better your credit. There are three main credit bureaus: Transunion, Experian and Equifax. Each give you a grade according to what your creditors report to them. More than likely, each credit bureau will have three different scores for you. Some creditors do not report to all three bureaus and each bureau has small variables that differentiate their scoring. To compensate for the difference; a lender will use your middle score from the 3 bureaus in qualifying you for a San Mateo mortgage. Even though there are some differences in the bureaus, they all basically use the FICO (Fair, Isaac and Company) scoring model to determine your credit worthiness.

The Components of Your Credit Score

Want More FREE Information?

We are only scraping the surface when it comes to credit, as I could devote an entire blog to credit and have an endless amount of content. If you want to know more about credit and your credit score send me an email at info@SanMateoMortgageBlog.com and I will send you an audio CD which explains How the Credit Scoring Model Works and my 15 Things You Need to Know About Your Credit Score Handbook.

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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