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How to Maintain and Protect your Credit

April 1, 2024
Milestones in the mortgage process - bozeman montana local lender

One of the most empowering parts of life is achieving the dream of homeownership. The process of obtaining a mortgage can sometimes seem daunting, and that’s why GoPrime takes great pride in helping buyers understand each step involved. We encourage everyone to get pre-approved when buying a home as it ensures you can move as quickly as possible through the process when you find “the” house.

Pre-approval includes reviewing paystubs, tax returns, bank statements, and your credit. This is an in-depth look at your financial situation and gives a definitive answer to the mortgage lender before you start looking to give you a clearer idea of your budget when house shopping.

Before diving into applying for a loan it is important to understand why your credit matters in the process and the steps you can take to manage your credit responsibly. Before approving a loan, the lender needs to make sure that a client has a good track record of paying their debts on time – this includes a review of credit reports and credit scores. Low or poor credit may result in higher interest rates or down payments. Working with a local lender who will take the time to understand your personal situation makes the process that much smoother.

What Happens When Your Credit is Pulled
When you apply for a loan, the lender will pull your credit report to make a lending decision. This is known as a hard inquiry and may have an impact on your credit score.

In addition, these hard inquires generate trigger leads. A trigger lead happens when a lender obtains your credit report, and then other companies receive notification that you applied for a loan. This can follow any application for credit including mortgages, credit cards, and car loans. Other lenders know you applied for a loan and will attempt to contact you to get your business.

Here are some ways to protect yourself from becoming a credit trigger lead:

  1. Stop pre-approved credit offers. If you don’t want to receive pre-approved credit offers, opt out of them by completing this form which notifies the three credit reporting bureaus not to share your information for pre-approved offers. This will help reduce the number of credit-related offers that you receive.
  2. Register for the National Do Not Call list. You can add your phone numbers to this list, and it’s free!
  3. Opt out of mail solicitations. There is a $4.00 fee to register online ($5.00 by mail), but this will reduce the amount of junk mail you receive for 10 years.

Maintaining Healthy Credit
Responsibly managing your credit is essential to achieving and maintaining a high credit score. Ways to lower your score include missed payments, defaults and major setbacks like foreclosure or bankruptcy. This may indicate to lenders that you’re a risky borrower and make it harder for you to qualify for a mortgage.

At GoPrime Mortgage, Inc., we understand that applying for a mortgage may cause stress and confusion. Protecting and maintaining your credit score during the preparation and application stages is important to ensure you receive competitive credit terms.

Don’t worry – there are steps you can take to maintain healthy credit.

  1. Be selective about the credit applications you submit. Only apply for credit when you truly need it and are confident that you will be approved. Applying for too much credit in a short period of time can lower your credit score and potentially make you a more attractive target for predatory credit-related offers.
  2. Check your credit report regularly. Once a year you are allowed one free credit report from each of the three major credit bureaus. If you don’t recognize an entry, file a dispute or contact the creditor for more information.
  3. Protect your personal information. Be careful when sharing any personal information, such as your social security number or bank account numbers, with anyone you don’t know or trust. This can help prevent identity theft and reduce the risk of your credit report being accessed without your knowledge or consent.
  4. Always pay your bills on time! Late payments will bring down your credit score, resulting in higher costs to you in the form of higher interest rates on future loans.

Remember that credit is part of your financial power. Working to improve and maintain your credit score can not only help you secure a mortgage, but help you in the future if you’re ever in a pinch and need to open a new credit card. Be sure to consider unexpected costs related to homebuying when applying for your loan to help you consider a realistic budget, and don’t forget that GoPrime offers many mortgage programs tailored to assist you on your road home. We provide personal, individualized support to be sure we find the right loan for you.

Find your local loan officer and reach out today!

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