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Contra Costa & Alameda Counties
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Your Credit

How credit influences your home financing options

One of the most important steps in buying a house is financing the purchase. Your credit is one of the first things that lenders examine when considering you for a loan. Making payments on time is the most important way to establish good credit. A pattern or history of frequent late payments can lead to a poor credit score that could negatively affect your ability to be approved for future loans, or result in home financing at a higher interest rate. Conversely, having a good credit score will let you secure a home loan at a lower interest rate.


Your credit report

When you are being considered for a home loan, mortgage lenders will review your credit report, which displays your credit history and credit score. Your credit score, also called credit rating, is based on a summary of your overall credit history. It is shown as a number that provides lenders with a fast and objective way to predict how likely you are to repay a loan.

Lenders use your credit report to decide on the following:

  • Whether or not to approve you for a loan
  • The type of loan for which you qualify 
  • The interest rate to charge you


The importance of good credit

Your credit history will follow you throughout your life. Therefore, making good credit decisions along the way will help a great deal when you're ready to realize the dream of home ownership.


Getting a copy of your credit report

Under the Fair and Accurate Credit Transactions Act of 2003  you’re entitled to a free copy of your report, once a year, from each of the three credit bureaus —  Equifax, Experian and TransUnion. Your free credit report should tell you what’s in your file both outstanding debts and those you’ve paid off, along with how well you’ve kept up with your payments and who has seen the information.