How and Why to Check Your Credit Before Buying a Home in California

It’s always a good idea to check your credit score before buying a home in California, especially if you plan to use a mortgage loan. Among other things, it could help you identify and fix credit-related issues that might be a problem when applying for a mortgage loan.

But what is a credit score, exactly? Where does it come from? And how might it affect you during the mortgage approval process? Let’s start with a basic definition and move on from there.

What is a Credit Score?

Your credit score is a three-digit number that’s based on information found within your credit reports. The FICO score, which is commonly used by mortgage lenders, ranges from 300 to 850. The higher the number, the better.

These scores predict how likely a person is to repay a loan on time, based on their previous borrowing history. Banks and mortgage lenders use them to assess the level of risk associated with a loan, and to help determine the mortgage rate.

So your credit score ties into the mortgage process in two ways:

• It can affect your ability to qualify for a loan.
• It can also influence the interest rate you receive.

According to the reporting company Experian: “A higher credit score could mean saving hundreds of dollars on your monthly payment and tens of thousands over the lifetime of the loan.”

This is why it makes sense to check your credit score before buying a home in California. It gives you a better idea of where you stand, in terms of mortgage approval. It also gives you a head start on fixing any credit-related issues you might have.

How to Check Your Scores

Many people are surprised to learn they actually have three different credit scores, one for each of the credit-reporting companies in the United States. Those companies are Equifax, Experian and TransUnion.

If you’ve borrowed and repaid money in the past, you probably have credit reports and scores with all three of these companies. So it’s wise to check your scores across the board, since any (or all) of them could be using during the mortgage application process.

You can request your scores directly through the MyFICO.com website. This site is owned by the company that created the FICO scoring model used by the three credit-reporting companies.

You might also be able to obtain your scores from your credit card company or your bank. These days, a lot of card companies and banks provide credit scores for their customers. In fact, it might even be shown on your most recent statement. You could also log into your account online and look for it there.

And don’t be surprised if you find three different numbers. While the scores may be based on the same information from your credit reports, they are produced by three different companies. So the numbers can vary. It’s actually rare to have the exact same score across all three of the bureaus.

Summary of Key Points

We’ve covered a lot of information in this article. So let’s recap some of the key points:

• It’s a good idea to check your credit scores before buying a home in California.
• Banks and lenders use these scores when reviewing mortgage applicants.
• A low score could make it harder for you to qualify for a loan.
• A higher number could help you qualify for financing and get a good rate.
• You can request your scores through MyFICO.com.
• You might also find them within your credit card or bank statements.

Need Mortgage Financing in California?

Do you need a mortgage loan to buy a home in California? We can help!

Bridgepoint Funding offers a wide range of home loan products, including some with flexible credit-score requirements. As a mortgage broker, we have access to multiple lenders. This helps us match each client with the best possible loan option.

We also work hard to educate consumers on all aspects of the home buying and lending process, something that sets us apart from other California mortgage companies. Check out our blog for more articles and tutorials like this one.

Please contact us if you have mortgage-related questions or would like to apply for a loan.