A Good Credit Record Takes You Across The Threshold to Homeownership

If you're planning to look for and buy a home any time soon, your real estate agent will recommend that you look carefully at your credit record to assist you through the financing process when buying your home.

Your credit record demonstrates how well you have handled credit in the past and how you use it right now. Your credit record is kept electronically by three private companies: Equifax, Experian and Trans Union.

A credit report is a listing of the information in your credit record at any one of these companies. It lists your debts and payment history with people and companies who have loaned you money under an arrangement to pay it back, such as banks, credit card companies and department stores. It shows when you pay your bills (whether you pay your bills on time) and how much you pay (whether you pay the proper amounts due). Your credit report also shows any history of tax liens or bankruptcies, even if these happened several years ago.

It is important to understand how significant your credit record is to getting a mortgage loan to buy your home. One of the first things you should do when you begin to search for a home is to order a copy of each of your credit reports and review them carefully. A real estate agent who is a REALTOR® is ready to work with you throughout the homebuying process - from helping you obtain an review your credit reports to providing helpful hints on qualifying for a mortgage - so you'll be ready to buy the home you select.

When you're finally ready to apply for a home loan, the lender you choose often gets a credit score as part of your credit report. A credit score is a computer-generated number that provides a snapshot of how likely you are to repay your debts.

A credit score is calculated by analyzing all the pieces of information in your credit record and summarizing them in a number. Your credit score is important! It will be used - along with your credit report and other information from your loan application - to determine whether you will get the financing to buy your home. Your credit score also may be used to determine the interest rate you get on your mortgage.

Pay attention to your credit an keep it on the right track. A good credit record will give you a strong credit score. And that's good news when you go out with an agent who is a REALTOR® to buy a home.

Information provided by Freddie Mac and the National Association of REALTORS®