Your credit history represents one of the three big C’s in the mortgage application evaluation process -- Credit, Collateral, and Capability (financial criteria). A mortgage underwriter will carefully analyze your credit report and score to determine if your past payment history warrants confidence in the risk to lend, what probably will be, the largest loan of your lifetime thus far.
So, Step #1 for you is to actually take a step backward and start by fully understanding what information is contained in your credit report. See Contents of Credit Report.
Step #2 is for you to ensure the accuracy of your information. PMC highly recommends that you obtain a copy of your report before you start looking for a home. Even if you are confident that your credit history is excellent, we still recommend it. Our experience working with many customers over the years is that there are many errors on people's reports. The time to discover such errors is now and not in the middle of your purchase transaction. An ounce of prevention .... See Order Credit Report.
Once obtained, it should be reviewed by a mortgage professional, preferably a Broker (for your benefit), for evaluation and confirmation with you that everything noted is indeed correct. If there is inaccurate information showing on your credit report, then Step #3 is necessary. See Correcting Errors.
If derogatory information appearing is correct, such as previous or current delinquencies, credit problems, collections, foreclosures, bankruptcies, child support/alimony arrearage, etc., it is important to discuss the situation honestly and fully with your Mortgage Broker. A professional Mortgage Broker knows and has experience hearing about legitimate reasons for derogatory payments such as unemployment, medical conditions, death, divorce, and other various understandable reasons.
A Mortgage Broker can evaluate the impact of such information and advise you if it is likely to create an obstacle to having your mortgage application approved. A Broker can also advise you how to improve the situation and recommend the appropriate loan program best suited to your credit history. See Credit Scoring & Grading.
See additional Helpful Resources listed on the right for further information regarding credit-related topics and feel free to contact PMC directly if you have any questions.