What do banks look for?

Lenders consider a variety of things when reviewing an application for mortgage loans. These items include:

• credit history
• monthly income
• expenses
• down payment
• house value

If you have no credit history your lender may require a large down payment plus you create instant equity. You will need to show a 2 year job stability. You may need letters regarding your credit worthiness such as a letter from your landlord. Many lenders offer first time home buyer programs with little to no credit history. Consult with a realtor to learn all you can about the home buying process.

Mistakes that will hurt your credit:

Closing accounts right before applying for a mortgage. Yes, having too many open accounts will hurt your score. But closing them suddenly may make things worse. If your goal is to improve your overall credit score, you shouldn't close accounts before applying for a mortgage. Instead you should pay your credit card debt down.

Checking on your own credit score won't hurt you. Nor will inquiries made by credit card providers. Although, FICO treats multiple inquiries in 45 day period as one inquiry. So, if you want to minimize the damage of credit inquiries make sure that you shop for your mortgage in a short period of time. One inquiry is equal to about 5 points.

The mortgage lender will most likely take the middle score from all three bureaus so get your FICO scores from myFico.com. You should fix any errors that show up. Free Credit report at Elite Credit Report