Ignite FB Tracking PixelPrepping Your Credit To Gain a Preapproval - Natalie Burnside
The Cobb Group brokered by eXp Realty
Natalie Burnside, The Cobb Group brokered by eXp RealtyPhone: (843) 295-1178
Email: [email protected]

Prepping Your Credit To Gain a Preapproval

by Natalie Burnside 10/04/2020

Photo by Pixabay via Pexels

Thinking of buying a home in the near future? You're going to need a preapproval. This tells real estate agents that you're serious about the home-buying process, and it alerts sellers that you're a solid, low-risk candidate. Preapprovals aren't always easy to score, however. And if you're someone who's had a few credit issues in the past, you may need to improve your credit score before your dream of home-ownership becomes reality. 

Here's a checklist of best practices for prepping your credit to gain a preapproval:

Check Your Credit Reports

Before you ever approach a lender for a home loan preapproval, make sure you know what's on your credit reports. You're entitled to one free credit report each year from each of the three different reporting agencies:

Order credit reports for yourself and for anyone who will be a co-applicant on your home loan, and then scour your reports for inaccuracies. 

File Immediate Disputes Over Inaccuracies

Any discrepancies you find should be reported immediately. It's an easy process of reporting the issue to the credit bureau and waiting while they go back to the creditor to verify what you've claimed. In most instances, the inaccuracy will be removed within a week or two, though you may have to produce receipts as proof of payment. 

Contact Creditors to Offer Settlements

Make a list of old, unpaid debts that are valid and set aside the funds to pay them off, one by one. If you have cash-in-hand, call creditors and ask them to settle for a portion of the balance in cash. Some may be willing to work with you, others may not. But it never hurts to ask. 

Pay Current Bills On Time

Stay current on existing accounts. Make sure everything is paid on time, from credit cards to car payments, to ensure you don't lose points on your overall score while you're working toward credit restoration. 

Pay Down Your Debt-to-Income Ratio

Your debt-to-income ratio is an indicator of how responsibly you use your credit. The lower your ratio, the easier it will be to obtain a preapproval. Pay down big balances. The more credit you're able to free up, the more attractive you'll look to potential lenders. Prepping your credit to gain a preapproval is surprisingly easy, but it requires the funds necessary to pay off outstanding debts and to pay down current balances. 

Start early if you suspect there are items on your credit report that require fixing, and be patient as things circle back around. Credit repair is not an overnight fix, but with steady progress, it won't be long until you have a preapproval for your new dream home.

About the Author
Author

Natalie Burnside

Originally from the midwest, Natalie and her husband Brian spent many years following his career but knew they were forever home when they made it to the Lowcountry. During vacations on Kiawah Island, they would dream of retiring to the South Carolina coast. When an opportunity presented itself to move to Bluffton much earlier than they envisioned, it was a “no brainer” and has proven to be one of their family’s best decisions. The two things Natalie loves most about the area are the community’s welcoming attitude and the always changing, but consistently breathtaking, views from the Lowcountry bridges. “It seems that everyone you meet in Bluffton and Hilton Head loves their community and genuinely wants you to fall in love with it, too…whether it’s for a week of vacation or to plant your own long-time roots.”