 TITLE: What Are Mortgage Overlays? CONTENT: How to Prepare Your Credit for a Mortgage\n-----------------------------------------\nThe first step in getting your credit ready for a mortgage is to check your credit, so you know where you stand. You can get a copy of your credit report for free from all three bureaus—Experian, TransUnion and Equifax—from AnnualCreditReport.com. You can also get your Experian credit report and FICO® Score☉ for free from Experian.\nReview your credit reports and note areas that need improvement. If you spot information you believe to be incorrect or outdated, promptly contact the appropriate creditor or file a dispute with the credit bureaus.\nHere are some other suggestions to prepare your credit for a mortgage:\n*   **Pay all your bills on time.** Payment history accounts for 35% of your FICO® Score, so just one missed payment could mean bad news for your credit score. Lenders could also see you as a riskier borrower and charge you a higher interest rate as a result.\n*   **Get current on past-due debts.** Delinquent accounts can ding your credit score each month you don't bring them current. If possible, pay off collection accounts and charge-offs as it could be tougher to get a mortgage if these accounts remain unpaid.\n*   **Lower your credit card balances to reduce your** **credit utilization rate****.** Approximately 30% of your FICO® Score is determined by the amounts you owe on your accounts, and how your revolving account balances compare with your credit limits (your credit utilization) is the primary factor. The lower your credit utilization, the better, but aim to at least keep your credit usage below 30%, as this is the point where its effect on your credit becomes more severe.\n*   **Don't apply for new credit.** Each new application creates a hard inquiry, which could temporarily lower your score by a few points. One or two credit inquiries almost certainly won't be enough to significantly alter your creditworthiness, but they could make a difference if your score is right on the edge of a scoring range.\nIf you've recently been denied a mortgage, reach out to the lender to learn why your application wasn't approved. The loan officer may be able to provide insights to help you resolve any issues causing overlays to be applied to your file. END