Step 9 of 48 Phase 2: Assess Your Buying Power
2.2 Get Your Credit Score
Obtain and review your credit reports. This step is an important part of your homebuying journey.
Common Mistakes to Avoid
- Only checking one credit bureau instead of all three
- Opening new credit cards during the mortgage process
- Closing old credit accounts before applying
- Making large purchases on credit before closing
Pro Tips
- Get free reports from annualcreditreport.com
- Check all three bureaus - lenders use the middle score
- Dispute errors at least 3 months before applying
- Keep credit utilization below 30% of limits
Credit Score Ranges
| Score Range | Rating | Mortgage Impact |
|---|---|---|
| 760+ | Excellent | Best rates available |
| 700-759 | Good | Competitive rates |
| 660-699 | Fair | Higher rates |
| 620-659 | Poor | Subprime rates |
| Below 620 | Very Poor | May not qualify |
Real-World Example
Marcus's Story: Marcus checked his credit score and found it was 640 - enough for an FHA loan but not enough for the best rates. He decided to improve his score before applying.
- Month 1: Disputed an old error on his report, reducing reported debt by $1,200
- Month 2: Paid credit card balances below 30% utilization
- Month 3: Set up autopay to ensure no more late payments
- Month 4: Avoided opening any new accounts or making large purchases
- Month 6: Score improved from 640 to 710
Outcome: By waiting 6 months, Marcus qualified for a conventional loan with a 0.5% lower interest rate. On a $300,000 mortgage, that saved him over $30,000 in interest over 30 years.