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1. Check Your Credit Score
Credit scores have a huge impact on the interest rate a home loan company
offers you. When you're getting ready to begin the process of purchasing a home,
get your credit report and look them over closely. Be sure to check your credit
report as early as possible to allow time to make corrections before the lender
checks your credit score. It may take months to get an error fixed, so start
early.
The three major credit reporting agencies are: Equifax, Experian and
TransUnion. Depending on what state you live in, you may be eligible for 1 free
credit report per year, per agency. While the credit report may be free,
obtaining your actual credit score is not free. It's still a good idea to check
your credit report. After all, it's free, and contrary to what some people
think, checking your credit report will not lower your overall credit score.
Your credit report will show any outstanding loans you may
have, such as auto loans that you haven't paid off. It will show any car loans
you have paid in full however, which will help build your credit.
A credit report / credit score isn't everything though, so if
you haven't built up much credit, meaning you haven't borrowed money in the past
or haven't opened any credit cards, you can prove your credit worthiness by
showing proof that you've been paying your bills for a long time. You can
provide the lender with copies of your telephone bills, cable bills, gas bills,
etc. This can prove to them that you're a trustworthy individual and that you
can be trusted with their money.
While you may think it's absurd that a lender would give you
a loan based on some number, it really is the best way to see how you have
handled loans in the past.
2. Apply For a Home Loan
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