National Real Estate Review Board

Your Credit Report

Your Credit Report. If you’re thinking about buying a home, you need to be aware of your credit. Better credit may mean mortgage opportunities with lower rates. Your credit report is a record of money you’ve borrowed, your history of paying it back and how much open credit is available to you. It consists of:

  • A list of debts and a history of how you’ve paid them, including credit cards, car loans and student loans.
  • Any bills referred to a collection agency, such as utility or medical bills that you did not pay or were significantly late.
  • Public-record information, such as tax liens and bankruptcies that may be linked to you.
  • Inquiries made about your creditworthiness, showing how many inquiries were made for your credit and if you were given credit based on the inquiry.

Check your credit

Pull your credit report and double check that the information is accurate and up-to-date. If there are any discrepancies, work with the credit reporting agency to have those cleared up before you inquire about a loan.

Your Credit Score

Your credit score is a single number that helps lenders decide how likely you are to repay your debts and plays a significant role when securing a mortgage. A score ranges from 300 – 850 points and is based on:

  • Your payment history and ability to repay your debts on time. Late payments will decrease your credit score.
  • The amount of total debt you owe, including credit cards, student loans and car loans. If your credit cards are at their limits, this can lower your credit score – even if the amount you owe isn’t large.
  • How long you’ve used credit and how you’ve managed it. If you show a pattern of managing your credit wisely, keeping credit card balances low and paying your bills on time, your credit score will be positively affected.
  • How often you apply for new credit and take on new debt. If you’ve applied for several credit cards at the same time, your credit score can go down.
  • The types of credit you currently use, including credit cards, retail accounts, installment loans, finance company accounts and mortgages.

A general guide to interpreting your score:

  • Credit scores ranging from 770 to 850 are considered very good, and the best credit rates are usually available to borrowers within this range.
  • Credit scores above 700 are considered good, and most borrowers’ credit scores are within this range. The median credit score is about 725.
  • Credit scores below the mid-600s may have difficulty obtaining a loan, and will experience higher interest rates and/ or larger down payments.

You are entitled by law to get a free copy of your credit report:

  • Every 12 months
  • Every time you find a mistake and want to make sure it’s been fixed
  • If you’ve been denied credit and in certain other situations, such as fraud

To get your annual free credit report, go to or call (877) 322-8228. For more information about your rights regarding credit and the Fair Credit Reporting Act, visit the Federal Trade Commission Web site.

Helpful Tips

To help you build, maintain and protect your credit:

  • Establish credit if you don’t have any. Open a free or low-cost checking or savings account and apply for one or two credit cards but use them carefully. It is important for lenders to verify that you have a credit history to determine your ability to repay your debts
  • Limit your number of credit cards and try to pay the balances in full every month. Using your credit cards responsibly can help you build excellent credit.
  • Honor your promise to pay your debts. With good credit, you can borrow for other major expenses, such as a home, car, or education, at a lower cost – ultimately saving you money.
  • Seek the guidance of a HUD approved counseling agency for free, confidential advice if you run into problems paying your bills. The sooner you reach out, the more likely they can help you.
  • Be sure to protect your private information. Do not provide any personal information (such as your social security number or credit card numbers) over the phone, online or through the mail unless you know the person or company.

By understanding your credit and the important role it plays with securing a home loan, you’ll be on the right path to realizing your goals. Remember, strong credit will provide you with many financial advantages so it’s worth the effort to maintain it.

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