Knowing your credit rating is an essential part of the home buying process, as you need good credit to qualify for a mortgage. For first time homebuyers, this might also be the first time you actually need to check your credit, as your home is your first big purchase.
Here are three ways to accurately check your credit rating so you can buy the home of your dreams:
- Visit your local bank.
From Bank of America to Wells Fargo and everything in between, most major national banks (and now even most smaller regional ones) have credit services that can be accessed online. If you prefer, you can also stop by the local branch of your banking institution to work with an associate to check your credit in person.
- Download an app.
- Definitely the Millennial way to do things, knowing your credit score is now just a few finger taps away thanks to useful smart phone apps like CreditKarma, Prosper Daily, or Credit.com. It’s best to be careful with these apps and treat their contents as extremely private, just like banking information.
- Work with a credit agency.
There are three main credit agencies in America: Equifax, Experian, and TransUnion. While you can learn more about each agency here, please note that these companies are for-profit and operate independently of each other and the government. While they all tend to access the same information (bankruptcy, student loan history, credit card payments, etc.) your numbers from each of these “big three” might vary slightly, so don’t worry if all three reports don’t match up exactly.
Hard inquires VS. Soft inquires
The tricky thing about credit is that the more you check it, the worse it can become. This is why it’s a good idea to understand the difference between hard (official) and soft (unofficial) inquires.
Hard inquires are usually things like:
- Applying for an auto loan, student loan, business loan, or personal loan
- Applying for a credit card
- Applying for a mortgage
Soft inquires are usually things like:
- Checking your own credit score
- Receiving pre-approved credit card and loan offers
- Running a background check, such as those done by employers
You can use soft inquires to check your own score so there are no surprises when the official report is run. However, always be sure to check the fine print before you send an inquiry to ensure which type it is.
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