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FICO: When Should Buyers Start to Check Credit Scores?

The credit-score company created guidelines for people planning to finance a home, car or other loan. Homebuyers should start up to 24 months before shopping.

SAN JOSE, Calif. – Certain credit-based applications need more preparation than others, and for many purchases – including home buying – a credit check should be the first step.

The check helps buyers confirm that they qualify for a home, and even if so, it may give them a chance to improve their score. It can also provide an early check before application about a likely loan’s terms and costs.

When to start checking your credit score

Mortgage: 6 to 24 months before you apply
Before shopping for a new home or refinancing a current mortgage, check credit scores at least six months before applying – more if you’ve had trouble with credit in the past. Loan options – by availability and terms – can be limited for people with a lower credit score, and an early check gives homebuyers time to fix any problems. Homebuyers with excellent credit should also understand how they can maintain their high approval score until the day of closing to make sure their financing doesn’t fall through.

Apartment: 75 to 90 days before a current lease ends
Landlords often check credit reports or rental-specific credit scores before approving a rental application. Evictions and other serious delinquencies harm credit and lead to a denied application. Check credit scores before notifying a current landlord that you plan to move – a way to know whether it’s safe to start shopping for a new apartment, or if it’s better to stay put for another 12 months.

Credit card: Before you apply
FICO says there’s a credit card for almost every credit-score range, but knowing a score helps you narrow down your options. If considering a specific credit card, checking FICO Scores before application can help the predict the likelihood that you’ll qualify. In addition, borrowers can shop for credit cards that fit their credit profile.

Cell phone financing: Before you apply
Many cell phone carriers got rid of free phones and two-year contracts. In its place, they allow customers to finance the full price of a new smartphone over 24-36 months. Credit scores influence the finance agreement and any down payment requirements. People with a low credit score may have to pay more upfront for the phone or financing options may be limited.

Auto loan: 90 days to six months before you apply
It’s possible to get a car loan with a low credit score, but generally for less favorable terms, including a higher interest rate and higher monthly payment. Checking credit scores a few months before car shopping allows buyers to estimate what they can afford. It’s sometimes better to delay a car purchase in order to improve a credit score rather than accept a high interest rate and higher monthly payment.

Since checking FICO Scores is a soft inquiry, the score won’t be affected by personal credit checks.

For more loan and credit education, visit myFICO’s blog.

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