While having your own home is an important part of your financial picture, too many people make decisions without thinking things over. Many people have what I would like to call a "pie in the sky" view of life. They tend to think that when things are going well it will always be that way; this is not always the case. Making a mistake with your mortgage is a fast way to end up with terrible credit.
When some people find that they qualify for a mortgage, they make the mistake of going out and taking on new debts. But doing this could be a big mistake. There have been cases where people who thought they would get a mortgage went out and got an expensive car, only to find out at the last minute that the mortgage couldn't be approved. You should never assume that you will get anything until you actually have it.
Another thing you will want to avoid is changing your job while you're in the process of applying for a mortgage. When lenders look at your credit history and employment data, they want to deal with someone who has stable employment and good credit. If you suddenly change your job while you're in the middle of setting up a mortgage, this could give your lender the impression that you are not stable. They may then begin to see you as a risk. If you get into a situation where you have to change your job while applying for a mortgage, contact the lender and let them know what you plan to do.
When you change your job, the lender wants to make sure you will be able to meet your payment obligations on the house. Between the pre-approval and closing stage, lenders need important information about your finances. Unfortunately, many people are already packing up to move into their new house during this time. Most lenders will need your bank statements for the last 12 months, and most people have already packed up these documents.
Though this isn't likely to give you bad credit, it can be a great inconvenience for both you and the lender. All of your important financial documents should be kept in a place where they are easy to access. Another thing you want to avoid is taking on more debt after you get the mortgage. You should review your financial information to make sure you are bringing in more than enough income to handle all of your expenses. If you are paying a lot towards your mortgage each month, it may be best to get a used car rather than getting a car loan.
Another thing that can lead to you having bad credit is having negative information on your credit report. Many people don't read their credit reports prior to applying for a mortgage, and their report may have negative marks on it. If the lender sees this, you may have a hard time getting a home, and your credit score may be lowered as well. Before you apply for a mortgage, check you credit report to make sure the information is correct.
Having a credit report with negative information can lead to you getting a mortgage that has a much higher interest rate. The lender will view you as being a risk, and will take precautions to make sure they protect themselves in the event you default on your payments. You also want to make sure your payments are made on time each month. If you're late on your mortgage payments, your credit won't be good. If you have a problem making your payments, contact the lender and work with them.
Joseph Kenny writes for http://www.ukpersonalloanstore.co.uk and offer more information on home loans and other loan topics available on site.
