First Time Home Buyer Credit Important - Why?

Your first time home buyer credit is very important! This is often misunderstood on how it affects what interest rate you pay.

Save money by learning how to be sure your home buyer credit file is in order.

Soooo we need to understand all the areas that relate to credit. Lenders will look at your credit score and then decide whether you can apply for a loan or not. Your credit score is a three digit score calculated by the credit bureaus from your credit history.

Since a three digit score is given from your credit history, we need to understand what this is. This is a report of your past borrowing and repayment habits. It will also include items such as any late payments, bankruptcy, and any unpaid medical bills. Sometimes a lender may say their checking your "credit reputation" which means they're checking your credit history. Don't have any first time home buyer credit history? Then you need to establish that history.

Who comes up with this three digit code?

There are three credit reporting agencies that collect data about you and your credit history from public records, your creditors and other reliable sources. Then they make your history accessible by means of a report to those you're applying to for credit. Each agency assigns a three digit number to evaluate your credit worthiness. The assigning of this number or credit scoring is a method that allows lenders to quickly and objectively assess the first time home buyer credit risk of a loan applicant.

Most lenders will use the middle score of the three scores they obtain from the credit reporting agencies to base their decision on. Thus a good credit score can do a lot for your loan options.

What can affect my credit score?

Mostly, how you pay your bills affects your credit rating. If you are 30 days late on many of your bills you will get a lower score. So paying your bills on time is very important. But there are some other things that can affect your rating like too many credit inquiries.

You see, every time you apply for credit a credit profile is sent about you to the creditor to look at your credit reputation. A record is kept for each of these inquiries and is also reported on your credit report. Too many of these inquiries sends a red flag to lenders. So don't go crazy on applying for a loan by applying everywhere you can, that can hurt your score.

Once the lender obtains a copy of your credit profile, they often give your file a credit grade.

Can I get a copy of my credit scores?

Yes you can get a copy of your credit scores!! Once a year you can get a copy of your credit report from each of the credit bureaus. You can also obtain a copy if you are turned down for credit. So take advantage of that!

If you discover your scores are not very good then you need to take action to improve your credit. Perhaps you need to get credit and debt counseling to improve things. Maybe that won't work for you and you want to repair your credit yourself. You CAN do it yourself!!

What if I have declared bankruptcy, can I get credit after bankruptcy? Yes it is possible but there are things you must do, click here to learn what that is.

Are there any other credit factors I should consider?

Yes, lenders look at other credit factors besides your credit score and credit profile before deciding whether to approve your mortgage. They take a look at employment history, income stability, and many other things before making that decision.

I also have some cool credit score faq's that are wonderful.

As you can see, first time home buyer credit is very important. It is one of the first things you should investigate before you even look for a home. Click on all the links on this page so you can get a full understanding of your first time home buyer credit.

Or return to First Time Home Buyers home page.