Home Buying Credit – Step 1: Know Your Credit

Welcome to Step 1 of my practical, experience-based Home Buying Series. I’ve spent years on both sides of the table — helping buyers qualify for USDA mortgages and guiding families through the real-world process of purchasing a home in today’s market. Most online guides are generic and skip the parts buyers actually struggle with. This series is different; it’s designed to walk you through every step the way I do with clients, with clarity, honesty, and no sales pressure. Let’s dig into what you need to know about home buying credit!

Understanding Your Home Buying Credit

Buying a home—whether it is your first or fiftieth—can be a long, drawn-out game where you don’t know what the rules are and you aren’t sure if you are holding the right pieces. It doesn’t have to be. Today, we begin with the first and most important step: understanding your home buying credit before the lender does.

Start by Checking Your Home Buying Credit

The easiest way to check your credit is at www.annualcreditreport.com. What you’re looking for are any negative items that show up in your reports or anything that’s just plain wrong.

Some years ago, I had an incorrect address show up on my report. It was a simple matter of filling out a form, and it was removed… eventually.

It’s important to pull all three bureaus — Equifax, TransUnion, and Experian — because not all lenders report to all three. I once had a client who thought his credit was excellent because his bank showed him a great score when he logged in. When he pulled all three reports, the picture wasn’t so rosy.

The other reason to look at your reports is to know what’s in them when you sit down with a lender. Having derogatory items doesn’t always mean “no.” A one-time issue with a reasonable explanation may not sink your loan — but surprises will.

A quick clarification that helps a lot of people: your credit report is not the same thing as your credit score. The report shows the raw data — who has loaned you money, your payment history, where you’ve lived, and sometimes even past employers. Your score is all that information boiled down into a single number. And each bureau calculates it differently, which is why you’ll never see three identical scores.

What isn’t on your credit report are things like your income, your savings, or how much money you keep in your checking account — lenders have to verify those separately.

What to Look For in Your Credit Report

So what should you actually be looking for on your reports?

• Accounts you don’t recognize
• Late payments that are wrong
• Collections that aren’t yours
• Addresses that aren’t yours
• Balances that don’t match reality
• Duplicate debts
• Accounts that should have been closed

How Long It Takes to Fix Errors

How long does it take to correct errors? If it’s something simple — like a wrong address — it might take a week or two. If you’re dealing with collections (especially if they’re questionable), expect months, not weeks.

Whoever reported a collection has no incentive to move quickly. They usually won’t act without proof, and if you paid something in cash years ago and lost the receipt, you may never fully solve it. It should drop off after 7 years, but I’ve seen instances where the debt was sold to a collection agency, the borrower made a payment and “renewed” the debt and it hung on far past the 7-year mark.

Also, be careful with anyone who promises to “fix your credit” for a fee. All they’re really doing is submitting documentation — something you can do yourself. If you don’t have proof, paying someone else won’t magically create it.

Each bureau has educational tools to help you understand your credit. Experian even offers a “boost” feature where you connect your bank account so recurring bills can help your score. Just know this only affects your Experian score.

When I worked at USDA, we used the mid-score — the middle of your three scores, not the highest or the lowest. If one score is way lower than the other two, you need to figure out what’s on that report that isn’t showing elsewhere.

Review your reports together before lenders run official credit checks.

Also note that each bureau has slightly different data because lenders choose which bureaus they report to. That’s why one report may look clean, and another may show something you forgot about.

Finally — and this is important — do not open any new accounts right now. No credit cards. No car loans. Nothing.

Every hard inquiry impacts your score. Some places will tell you they can “check you without pulling credit,” which may be true for a soft pull — but once you apply for a loan or credit card, a hard inquiry is coming. And that does affect your score.

Soft Pull vs. Hard Pull: What’s the Difference?

What’s the difference between a soft pull and a hard pull?

A soft pull is a peek at your credit.

It doesn’t affect your score, and you can’t be denied anything based on it.
Examples include:

• checking your own score
• Experian Boost
• pre-qualified credit card offers
• “see if you’re eligible” ads from lenders

Checking your own credit never hurts your score. And at this stage, you don’t need to know your exact numerical score — you just need to know what’s on each report. In short, you do not need to pay each bureau (or any bureau) for your numerical score. Most banks and other deposit institutions (like credit unions) now show you one of the three scores for free, so you’ll have a rough idea of what the info on that particular report looks like as a number.

Remember that the score you see on apps like Credit Karma isn’t always using the same scoring model that your lender will use.

A hard pull is the official inquiry lenders use to approve you for credit.

It does affect your score — usually by 3–8 points — and it stays on your report for about two years.

Here are the types of applications that trigger a hard pull:

• applying for a mortgage
• applying for a car loan
• applying for a credit card

Buy-Now-Pay-Later (BNPL) services, such as Affirm, Klarna, and Afterpay, often show up on your credit history. At USDA, we treated them as short-term loans. You do not want to use BNPL right now because those small payments can affect your debt-to-income ratio and raise questions during underwriting.

The important part is this:

You cannot get a mortgage without a hard pull.

So don’t stress about protecting your credit from the pull that actually matters — focus on avoiding unnecessary ones beforehand. Also, multiple mortgage pulls within a short period (usually 14–45 days, depending on the scoring model) generally count as one inquiry — so smart rate-shopping won’t punish you. At this stage, you’re simply gathering information so you know where your home buying credit stands.

Pre-Qualified vs. Pre-Approved

Because lenders love marketing terms, you’ll also see pre-qualified and pre-approved, and they are not the same thing.

• Pre-qualified usually means a lender looked at a soft pull or simply took your word for your income and debts. It’s a snapshot — helpful for conversation, not for buying a home.
• Pre-approved requires a hard pull, documentation, and actual underwriting review. This is what sellers and real estate agents take seriously because it means someone has verified your information instead of guessing.

You can buy a house with a pre-approval.

You cannot buy one with a pre-qualification.

And you cannot get a pre-approval without that hard pull.

Why Step 1 Matters Before You Meet a Lender

Step 1 is all about clarity. When you know what’s really on your credit report — the good, the bad, and the ugly or unexpected — you walk into the rest of the homebuying process with confidence instead of surprises. Reviewing all three reports gives you the full picture of your home buying credit before lenders run official checks. In Step 2 of this series, we’ll take that clarity and build a real-world budget that lenders understand… and that you can actually live with.