Credit and Homeownership
If you're thinking about buying a home, you should also be thinking about your credit. The first step in the homebuying process is understanding your credit.
When you apply for a mortgage, lenders will review your credit report. Your credit report is a history of how you've managed your finances: it's a record of money you've borrowed, your history of paying it back, and how much open credit is available to you.
Your credit report follows you wherever you go and will have a big influence on whether or not you can get a mortgage, the terms of that loan, and the interest rate. If you have good credit, you may have a much wider range of mortgage options with lower rates.
So how do you better understand credit?
- Be aware of how important your credit history is to the process. Establish good credit and protect your credit.
- Look at your credit report and credit scores.
- Make sure you correct any mistakes on your credit report right away.
- Find a reputable credit counselor to assist you with any credit issues.
Quick Knowledge Check
Take our Credit and Homeownership Knowledge Check to find out if how well you know your credit facts.
Resources
There are many credit terms, and they can get confusing. Use our glossary if you see a term you don't understand.
Think of your credit as a personal asset.
If you own a car or anything else of value, you protect it. Your credit is the same. It is one of the most important pieces of homeownership – and any other important purchase.
Many people don't understand credit and therefore don't give it the attention it deserves. Don't be intimidated – it only takes a small amount of time to learn what you need to know to make smart choices and protect yourself.