Getting mortgage-ready: what underwriters look at

Full transcript

If you're planning to buy a home, the time to look at your credit is months before you start touring houses — not the week you make an offer. An underwriter is going to look at your credit report for a few specific things: a history of on-time payments, how much debt you're carrying compared to your limits, any collections or charge-offs, and how recently you've opened new accounts. Inaccurate or unverifiable negative items can drag your score down and raise the rate you're offered, which over a 30-year mortgage can cost tens of thousands of dollars. That's why it pays to review all three bureaus early, challenge anything that's wrong, and avoid opening new credit right before you apply. Going in clean and prepared is what moves you from 'declined' to 'approved' — and to a better rate when you are approved.