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How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

Bad credit habits that can hurt a mortgage application

For consumers, the two most important aspects of applying for a mortgage are making sure they have a large enough down payment for the property they want, and carrying a high enough credit score to qualify. And while it's pretty easy to determine whether a down payment meets requirements, there are plenty of issues with credit ratings that can arise without a person realizing they've done something wrong.

As a consequence, it's vital that those who want to buy a home make sure they know where they stand with their credit before they enter the mortgage process. Often, if there are issues, they stem from relatively common missteps people have made at some point in the past, and usually aren't too difficult to correct. Sometimes other problems can crop up, but in general, there are common mistakes to avoid.

The biggest issue
Usually when a person's credit rating takes an unexpected step back, it's because he or she made a late payment on even one account in the previous several months. Payment history makes up the single largest portion of a person's score, at 35 percent of the total, and even one missed deadline can cut a score significantly. That, in turn, can greatly reduce the likelihood that a person ends up being denied for just about any type of credit they may seek, but especially mortgages.

For those who have made this common mistake, the only thing they can do to get their scores back in shape is to simply take the next several months and diligently pay every bill on time and in full. Doing so will help repair their damaged credit, but it will likely delay their abilities to qualify for a home loan for a while.

Another common mistake
Meanwhile, many consumers may be suffering from lower credit scores because they still have too much outstanding debt. This factor makes up another 30 percent of a credit score, and in general, will be at full strength when people owe less than 30 percent of their total combined credit limits. For example, if a consumer has less than $3,000 in debts on four credit cards with a combined credit limit of $10,000, his or her score would be in prime shape, and every little bit over that threshold owed would cause the rating to drop.

Other problems that can crop up here can be outside of consumers' control, though. They can often discover them simply by getting free copies of their credit reports and making sure everything is as it should be. For instance, if they've been victimized by identity theft, which can either result in someone opening accounts in their name, or significant debts being added to existing accounts, they should contact the lenders in charge of those accounts, as well as the companies that issue their credit data to clear up the problem.

For more information about this article, call 866-614-5959.

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