Access copies of your report from the three major credit bureaus – Experian, TransUnion, and Equifax – at least 60 days before you plan to apply for financing.

When you receive your credit reports, read them carefully to make sure all information is accurate. Errors can significantly impact your ability to get a desirable home loan. If there is erroneous information on your reports, immediately dispute it with the bureaus.

Your Credit Score
Lenders rely on credit scores to determine their risk in lending you money. The most common scoring model is the FICO score, developed by Fair, Isaac and Company. FICO scores range from 300 to 850. The higher your score, the lower their risk – and the better interest rate you will likely be offered. Most mortgage lenders look for a score of at least 620.

FICO scores are based on many factors. The five significant categories (in order of greatest weight) include:

• Payment history
  Late payments have a significant negative impact, particularly when the lateness is frequent, recent, or severe. Bankruptcies, judgments and collection accounts are major factors in lowering your credit score.

• Amounts Owed
  Large balances, particularly if they are close to the credit limit, can lower your score.

• Length of Credit History
  Long relationships with creditors have a more positive effect on your credit score than newer relationships.

• Pursuit of New Credit
  Frequently applying for credit can lower your score (though mortgage and auto loan inquiries within a fourteen-day period will be considered as one inquiry). Promotional inquires have no impact on your score.

• Types of Credit in Use
  Having a variety of credit instruments where you have proved responsibility of use has a positive impact on your credit score.

If your score isn’t where you want it to be, you can take steps to improve it by:

• Paying down your debt
• Paying on time, every time
• Avoiding transferring balances to new cards
• Keeping your credit card balances well under the maximum available limit
• Only applying for the credit you need and closing cards you don’t use
• Repaying collection accounts, judgments, and liens