You don’t have to look far to know that the housing market is hot now. Despite the economic instability caused by the coronavirus pandemic, home demand is high and prices are soaring.

As more companies empower employees to work remotely long-term, individuals and families are reevaluating where “home” is — investing in more varied spaces that meet their changing lifestyles and needs. At the same time, many younger millennials and Gen Zs who were forced to stay put or live at home an extra year are hitting the market.

Whether you’re making the transition from renter to buyer, trading up or down, or exploring your options as a novice in the market, your credit report should be one of the first factors you consider.

Here are four things to keep in mind, especially in a competitive buyers’ market:

Know what your credit represents and why it matters

First, it’s important to understand what your credit report represents and what it doesn’t. A credit report tells the story of your individual choices. It’s a record of your financial obligations and your accountability to pay in full, on time. You don’t need to be a wealthy individual to have good credit. It’s about demonstrating your ability to pay your debts in a consistent, timely manner to provide lenders the context they need to make decisions about potential loan opportunities.

Your credit can influence the home-buying process in a variety of ways, including loan eligibility and amount, mortgage types, down payment amount and private mortgage insurance costs. Each of these factors will affect your overall budget and, in turn, impact where, when and what you buy.

Review your credit report and credit score

If you’re thinking of buying a house at any point in the future, the first thing you should do is look at your credit report. Go to annualcreditreport.com, order your credit report and review it line by line. Historically, you could do this for free on an annual basis, but the three major credit reporting agencies expanded this option to weekly through April 2022 to help people during the pandemic. You don’t have to enter your credit card information and nobody will try to sell you anything.

A credit score is based on the information in your credit report and aims to summarize your credit profile with a single value on a scale of 300 to 850. Lenders will often use this score to assess your viability as a potential customer. To qualify for a mortgage, you will probably need a minimum credit score in the 600s or above. If you don’t meet that benchmark, don’t panic — it just means you have some work to do before getting into the market.

Communicate with your lender

Have an open dialogue with your lender about your goals, intent and financial capacity. If you’re concerned that you won’t be able to make large payments every month, you may want to consider a longer-term loan with smaller payments to maintain your credit.

Remember that your credit score is helpful, but it doesn’t tell the full story. Identify any gaps in your report and be prepared to explain the cause of those gaps, whether you experienced a layoff due to covid-19 or faced an unexpected emergency expense. To ensure accuracy, credit reports reflect all activity, but acknowledging gaps and providing context to lenders can go a long way. If there’s an error on your credit report, you should begin the dispute process immediately to get it resolved.

Take steps to strengthen and maintain your credit

Leading up to and throughout the home-buying process, consider ways to build — and maintain — strong credit. There are several ways you can do this.

Most important, you should be paying your bills each month as the terms of your loans require, whether it’s a student loan, car payment or credit card bill. That doesn’t necessarily mean paying off all of your debts in full each month, but it does mean making the minimum payments each month. If you miss a payment by more than 30 days, it could significantly hurt your credit.

If your credit report doesn’t have much activity to show, ask if they will accept a statement of your rent payments as additional proof of your financial reliability. Currently, rent payments are not always factored into an individual’s credit score, and more companies are working to bring rent and other information into the equation.

Many people avoid checking their credit until a third party requests it, but especially as a first-time home buyer, it’s important to be proactive so you can start taking the appropriate steps to ensure a smooth process.

Francis Creighton is the president and CEO of the Consumer Data Industry Association headquartered in Washington.

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