Applying for a home loan is a lot different now days than it was a few years ago. It is more important now, more than ever, to prepare your credit before you apply for your home loan.

The Lawhead Team would like to share some steps to preparing your credit for a home loan:

1. Keep an eye on your credit reports regularly. There are three things your mortgage lender will look at when you apply for a home loan. They are: steady income, a down payment and a solid credit history. If you check your credit report, you will be able to make sure there is nothing hurting your credit that you didn’t know about. Get your free report at AnnualCreditReport.com.
2. Challenge any misinformation on your credit report. If there are any inaccuracies negatively affecting you, dispute it with the credit bureaus. If you have proof of the mistake make sure it is removed from your credit report.
3. Make sure all delinquent accounts are paid. If you are applying for a home loan, a mortgage lender wants to make sure you are able to make your existing payments on time. Any outstanding delinquencies will ruin your chance of qualifying for a home loan.
4. Lower your debt to income ratio. If you have a light level of debt relative to your income, your lender will question your ability to make your home loan payment. Try to bring your monthly debt payments to at most, 12% of your income. Obviously the lower your debt to income ratio the better.
5. Don’t take on new debt. This will make a mortgage lender suspicious of your financial stability even if your debt level is staying below 12% of your income. Wait until after you get your mortgage to apply for any new credit-based transactions until after you have gotten your mortgage.