If you are buying a home sometimes soon and have plan to apply for a mortgage loan follow these Do’s and Don’ts recommendations:

Do’s and Don’ts Prior to Applying a Mortgage Loan:

About two months (if you know your credit is good) or 8-10 months (if you know you have credit issues)  prior to applying for a Mortgage loan, get hold of your free credit reports from three major credit bureaus in the United States; Equifax, Experian and TransUnion. You can request your credit reports via phone, mail, or website from each bureau. Optionally, you can request your credit score from each bureau by paying some fee. There are also many websites that provide you with reports and scores and monitoring your credits for a fee. However, most of them offer a one-month free trial. See What is a Credit Score to find out how and where you can request your credit reports and scores.

Remember you can request and get your credit reports without hitting your credit score as many as times you want. However, usually you are only entitled to one free report from each credit bureau in a year or more if you meet certain criteria. 

After getting your credit Reports, Do the following:

DO’S:

·         About 8-10 months prior to applying for a Mortgage loan, get hold of your free credit reports from three credit bureaus.

·         Check and report for correction any inconsistencies, inaccuracy, missing information or credit history, the negative items that should have been removed or deleted, etc.

·         Try to negotiate, work it out with creditors and resolve issues regarding negative items as much as possible.

·         Pay and continue to pay all your bills (at least the “Minimum Payment” on Credit Cards) and loans on / or before the due time.

·         Look at each credit card’s Balance/(Line of Credit) ratio and pay as much as possible to reduce the unpaid balance to a point the that ratio becomes less that 30%.

·         Have a good cushion of available credit between your current balance and your credit limits on all open trades

·         Time-by-time, request a soft credit line increase. Typically, creditors can increase your line of credit a couple of hundreds or thousand dollars without running your credit report, if you have a good record or relationship with them for a year or so.

·         Use (charge at least some amounts) all your credit cards including those that you usually don’t use every month. And off course pay them on time.

·         Pay off smaller debts.

·         If you don’t have any credit card or credit history, you need to establish a credit history. E.g., Apply Department Store Charge Cards and use them wisely, pay your bills on time. It takes at least six-twelve months to show established credit in your credit reports.

·         Repeat above steps about 2 months prior to applying for a Mortgage loan. Get hold of your free credit reports from three credit bureaus again and go through the same steps as above until you have a good credit score.

DON’T’S

·         Don’t be tempted to open a store charge card to receive discounts.

·         Don’t apply or accept any new Credit Card

·         Don’t apply “Hard” Line of Credit Increase.

·         Don’t apply for a new loan.

·         Don’t apply excessively again and again to get a credit card.

·         Don’t carry a large number of credit or store charge cards

·         Don’t Allow anybody run your credit report,

·         Don’t Close any of your Credit Cards

·         Don’t purchase a major item and charge Credit Cards

·         Don’t let the ratio of Amount Owed to Credit Line be greater than 30% for each card.

·         Don’t be late paying your payments or obligations

·         Don’t Change your Job

·         Don’t get involved in a law suit

·         Don’t file for Bankruptcy, foreclosure, short sale, etc.

·         Do not place dispute in your credit report. This causes more delay for approving a loan and could cause a higher interest rate.