Too many consumers get frustrated when a ding on their
credit score delays the process of closing on a mortgage or
completing a home equity loan. Before you start shopping for
financing, understand these four important tips.

Review Your Credit Score. Nearly every bank, credit union,
and mortgage lender relies on a three digit score provided
by one of the three major credit bureaus to help them make
lending decisions. A credit score can range from the perfect
850 all the way down to the abysmal 300. Scores under 720
may not qualify for the best interest rates, so you should
check your credit scores with all three bureaus before
shopping for a loan. You may discover you have some cleaning
up to do before you can take advantage of a great loan deal.

Scan Your Report for Mistakes. Though some consumers
struggle with debt, many more would-be borrowers suffer
needlessly because of mistakes they made in the past or
mistakes that credit bureau systems made when compiling
their reports. To avoid embarrassment and wasted time during
the loan origination process, you should review your report
carefully before you start shopping for loans. Dispute any
inaccuracies both with the credit bureau and with the
creditor using certified mail. If you find any long-lost
bills you left unpaid, pay them. A bill as insignificant as
$100 can actually stall or derail the closing process,
costing you the chance to buy your dream home.

Avoid Credit Applications. In the weeks leading up to your
home purchase, you may consider switching banks or
responding to attractive credit card offers. Resist the urge
to earn those frequent flyer miles, because a flurry of
applications can show up on your credit report
simultaneously. Therefore, lenders may grow concerned about
potential identity theft. Even worse, lenders might assume
you've lost control of your spending, making you an
unsuitable candidate for a home loan.

Do All Your Shopping on the Same Day. For the same reasons,
you should choose one day to make inquiries from your
favorite mortgage lenders. A few weeks after your inquiries,
your applications will show up on your report and drag down
your score by a few points. Because the bureau assumes that
every application may result in an approval, the amount of
your potential debt load increases significantly. In
addition, the market changes so frequently that quotes made
on different days cannot be compared directly. Be prepared
to make your phone calls, run the numbers, and accept a
locked pre-approval all on the same day. 

Kevin Adelsberg is a writer for FDLoans.com.
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