When Do Lenders Check My Credit Score for a Mortgage?

Reader Question: "At what point during the home buying process does the mortgage lender check my credit score? Is there any way I can find out if my score is good enough, before I even apply for a loan?"

Different lenders have different application procedures, so it will vary slightly from one mortgage lender to the next. With that being said, most lenders will check your credit score as early on in the application process as possible. This benefits everyone, including you. They want to know if you're a good candidate for a loan early on, because it's a time saver. So they typically do this on the front end of the process.

In addition to your credit score, the lender will check your income level, the various debts you carry, and other qualifying factors.

Check Your Credit Score Early

You can check your own credit score, and I recommend doing this as soon as possible. By the nature of your question, I can safely assume you're planning to buy a home in the near future. If that's the case, you should know where you stand. You should know your current credit score, your debt-to-income ratio, and other qualifying factors.

It's important to do this early on in the home buying process, because if you find out your score is low, you will need time to improve it. With a bad credit score, you'll have a much harder time qualifying for a home loan. And even if you do qualify with bad credit, you certainly won't get the best interest rate.

That's why I always tell home buyers to check their scores early on, so they can make improvements if needed. This helps you get approved for a loan, and it also helps you qualify for a low interest rate.

How Lenders Check Your Credit

To put this into perspective for you, I'll outline the basic steps that take place when you apply for mortgage loan:

• You would submit an initial application through the lender's website or by visiting their office in person.
• The lender will review your income, your current level of debt, and a few other preliminary factors.
• Either at this stage, or shortly after it, the mortgage lender will also check your credit score to see how you have managed your finances in the past.
• If you measure up well in all of these areas, the lender will probably give you some form of pre-approval letter. Basically, they are telling you how much money they are willing to lend you based on your qualifications.
• If your credit score is too low, or you are carrying too much debt relative to your income, the lender might reject your application at this point. Likewise, they may turn you down if you're simply asking for too much money based on your income.

Like I said earlier, the process varies slightly from one lender to the next. It also varies based on whether you start the process online or in person. But this is generally how it works. They will check your credit score early on in the process, in order to save everyone time.

Don't Wait - Get Started Today

But you shouldn't wait until then -- you should check your score right now to see where you stand. That way, if you need to make improvements before applying for a loan, you'll have time to do so (it doesn't happen overnight).