Your Credit Report:Getting the Loan You Want

When you’re in the market for a home loan, your credit history is critically important.

Knowing what’s in your credit report and taking steps to correct any errors are important groundwork necessary to get the loan you want. In today’s world your credit heavily influences loan products and services that may be available to you. By taking more control over your financial obligations, you can positively impact your credit worthiness.

What’s in your report?

Your credit report is a record of debts andpayment habits. Past credit performance serves as the most useful guide for lenders when determining a borrower’s attitude toward credit obligations and predicting a borrower’s future actions. In short, it helps a lender determine the risk involved in making a new loan.

It’s a good idea to know what your report says about your history. There may be errors in your report that you can have corrected.

Go online to any of these reporting agencies’ sites to get your report:

• Equifax (http://www.equifax.com/home/en_us)• Experian (http://www.experian.com/)• TransUnion (http://www.transunion.com/)

Or visit www.annualcreditreport.com, a site sponsored by the three agencies.

You're entitled to a free credit report from each agency once a year. At the reporting agencies’ websites listed above, you can order your report and get more information. You will need to verify your identity by supplying personal information to get your report.

The reporting agencies will also supply credit scores. Your credit score is a number that provides lenders with a quick picture of how you've handled your credit obligations over time.

When you apply for a mortgage loan the lender will obtain your credit report and score to determine your eligibility for a loan. Lenders generally establish minimum credit score requirements for the type and amount of mortgage loans they offer.

How can you make an impact?When you get your credit report, it can also come with explanations of why the score is not higher. This gives you an opportunity to understand and target factors affecting your score. No matter what your credit score is, you can seek to make it better.

It will take some time, but correcting past behavior reflected in your report is generally the way to bring your score up. Your score is calculated using five factors from your credit report. Those factors and some points about managing them are:

• PAYMENT HISTORYThe payment history measures how you've paid all credit/debt accounts. Using credit cards creates apayment history, while using debit cards and cash doesn’t. A history of carrying debt and paying it off on time shows lenders that you’re responsible with your money and helps make them confident that you can pay your mortgage in the future.

• AMOUNT OWEDThe amount owed compares your total available credit to the amount you currently owe. Keeping your debt low makes you more attractive to lenders and saves you interest charges.

Try to keep your credit card balances as low as possible. The closer you get to the limit on an account, the more likely you are to see a decline in credit scores.

• LENGTH OF CREDIT HISTORYLength of credit history pertains to an individual's debts and payment habits over time. The longer positive credit history the better. It helps a lender determine whether or not you’re a good business risk. Factors of your credit history include the age of your oldest account, the average age of all your accounts,and the time since the last activity on each account. Opening a new credit card could potentially shortenyour average credit history while keeping an older credit card, even if you’re not using it, could indicate a longer history of established credit.

• NEW CREDITNew credit accounts and inquiries reflect every time you open a new account or apply for a new account. Every time a lender gets your credit report or score, it shows up as an inquiry on your creditreport. When an inquiry is created, that affects your score. Limiting the number of times you apply for a new account helps reduce inquiries that can lower your score. In some situations, such as shopping for amortgage, numerous inquiries made during a short time period typically won’t hurt you, because the creditagencies know you are shopping for the best loan.

• MIX OF CREDITTypes of credit in use will also be reflected on your credit report. Your credit report will list the number of your accounts that are credit cards, installment loans, mortgages, etc. Having a mix of credit is ideal. Check your credit report for accuracy and report any errors to the credit agency. Closing accounts orpaying them off will not hide delinquencies.

Knowing what is in your credit report, and how you can correct and influence it, can help you gain more control of your financial future.

I am here to help with all your questions about credit, mortgages and the home buying process.

Angie Ripley360 Partners - RE/MAX HeartlandCell: (816) 665-4228Office: (816) 373-8400