If you understand your credit score, you'll be better able to secure competitive mortgage rates!

Credit scores, along with income and debt load, sum up how well a person has managed credit and whether the person represents a good risk for a lender. The most common credit-scoring model used today is Fair, Isaac & Co.'s (FICO). The big three national credit repositories-Equifax, Experian, and TransUnion- rely on it. The scores typically range from 300 to 900, with a higher score indicating a better credit risk.

(Check your own credit report without an inquiry ding by paying a small fee and applying on-line. See http://www.equifax.com  or http://www.experian.com  or http://www.transunion.com  Follow instructions on these web sites to dispute credit that isn't yours. Close extra accounts that you no longer use by writing letters to creditors).

To improve your score:

1. Wait 12 months after credit difficulties to apply for a mortgage. Some items are scored less heavily after 12 months.

2. Don't order home furnishings or appliance during the mortgage application process. The balance owed will be counted as debt.

3. Pay back taxes in a lump sum to reduce your overall level of debt.

4. Avoid finance companies, which charge high fees and rates. Their use is considered indicative of poor credit management, even if the borrower pays the loans back on time.

5. Shop for rates all at once. Multiple inquiries from the same type of lender are scored as a single inquiry if received within a short time period.

6. Don't open a lot of credit card accounts quickly to build a credit record. Doing so lowers the average account age and looks risky to the scoring model.

7. Pay down credit card balances. However, off-loading credit card debt to a new card with a lower interest rate isn't considered good credit management and also results in another credit inquiry that will lower your score.

Source: REALTOR Magazine, March 2003

For more tips or information contact Lynn or Suzanne Asay -
telephone: 208-884-4006