Let’s say you are pursuing your plans of investing in a real estate, such as a Denver real estate property, one of the things that you should not forget to accomplish is to take a look at your credit report before you start eyeing some Denver homes for sale listings and applying for a loan. Do not forget to check your credit history and credit score because creditors, banks and other lending companies will consider these factors when they study and decide if they will give approval to your home loan.

What is credit report?

Your credit report states all the financial activities you made in the last few years. It shows all the bank accounts and other financial accounts you have, how long have you been using them and how well do you do with your credit payments. These report will be very important for the banks and creditors because it can give them a good view of how consistent and reliable you are when it comes to paying bills and mortgages. Utility companies and other facilities such as credit card companies where you go to pay your bills report all the payments and other financial transactions you do with them to credit reporting companies namely Equifax, Experian and TransUnion.

What is credit score?

The credit score is an important information that lending companies look at when giving an approval to a mortgage application such as home loans. Your credit score is a number that represents how high or low your credit worthiness is. Your score can be from 300 to 850, as computed by the credit reporting companies. As you have guessed, high credit worthiness can give higher possibilities to get approval for your loan. The companies compute for your credit score by using all your payment history and account information. The company will offer this information to credit companies, banks and future employer to quickly know how trustworthy and reliable you are to pay your mortgages consistently. Because of this, creditors can save the time of making an intensive investigation about you by interviewing your family and friends so they can assess your consistency and reliability when making payments.

Why check your credit report?

It is important that you check your credit report before starting your house hunt because there are possibilities that your report have errors that can greatly affect your credit score. CNN Money stated that 79 percent of all the reports contain inaccurate information. A quarter of credit reports have serious mistakes stated in it. You are entitled with one free report from the Annual Credit Report. If you saw mistakes and outdated information written on it, make a formal dispute letter and send it to the company. Explain your arguments thoroughly and if possible, include documents that will give more bases to your arguments. Reporting companies have thirty days to respond back to your letter.

Take the advantage of looking at your free credit report before you start your home loan application so you still have a chance to correct or update them. It can also help you to improve your credit worthiness. When you already have an accurate credit report and a high credit score, it will be easier for you to get an approval for your Denver real estate home loan application.