1) Make a list of your credit cards and loans.

• Write down the name of each credit card or loan company and account number.
• This may seem like a tedious step, but it will help you analyze your credit report later. 

2) Meet with a mortgage lender.

• This is a step you should take before beginning to look at homes, for several reasons: You need to be clear about your purchase amount.
• You will need a letter confirming that you are qualified for the purchase amount.
• And, you may need to correct some problems on your credit report.
• Choose a mortgage lender with a good reputation and a "consultative" attitude.
• If possible, meet with your lender in person to discuss your financial situation.
• Ask for a complete loan process, with full credit approval for your intended loan amount.
• Get your mortgage interest deduction for your loan.  Plug this amount into turbo tax and see how much your tax due decreases from your current amunt.  Divide this savings by 12 and this represents money you will have in your paycheck every month to help pay your mortgage. 
• I am an experienced lender and can help answer all these questions.

3) Review your credit report.

• As a part of your loan approval, your credit report will be ordered.  Ask for a copy of your credit report.
• It will include data from the three main credit reporting agencies - Equifax, Experian, and Trans Union.
• Ask your lender to sit down with you to review your credit report.
• This is a valuable part of the service of a good mortgage lender.
• Credit report data is written in code and short-hand. It is difficult to understand.
• Confirm the information shown on the report.
• If you find some errors on your report, your lender can suggest ways to correct the problems and improve your score.

4) Correct Mistakes.

• Keep in mind that the data in your credit file is input electronically.
• Mathematical formulas are then applied to your information to arrive at a credit score.
• It is very possible that there are some mistakes in your credit file.
• It is not unusual to have paid a bill late for one reason or another.
• You may have had a dispute with the creditor, or a mistake was made in the delivery of the bill.
• It is very possible that old closed loans are still showing active with a balance due.
• Ask your lender for advice on how to correct mistakes.
• Each of the main credit agencies has a dispute resolution page for your use.

5) Do you have serious credit issues?

• If you have had a habit of overspending or paying bills late, it would be worthwhile to get some advice on how to work your way out of debt and establish responsible financial habits.
• You may need the help of a financial advisor to help you handle current debts and decide if it is appropriate to obtain new credit.

6) What do credit scores mean?

• Under 620 - Poor
• 620-680 - Average
• 680-720 - Good
• 720 - 800 - Excellent
• 800-850 - Excellent +

7) How is your credit information scored?

• 35% - Your payment history. It is important to pay bills on time in order to have a good score. Try online banking or auto draft to avoid late payments.
• 30% - The ratio between credit available to you, and credit you have used. It is a negative factor if you are over 50% drawn against your available credit. This is why it helps to keep unused credit card accounts open. They add to the total amount of credit available to you, compared to the amount you have charged.  Don’t allow any of your accounts to have a reoccuring balance over half your credit limit.
• 15% - The length of credit history on each loan. A more seasoned loan receives a higher score. It is not a good idea to accept credit cards at initial low rates, and then move to new credit cards after a short time. Short loan spans are negative.  
• 10% - The number of requests that have been made for your credit report. Your credit information is pulled every time you open a new loan or credit card. A large number of these have a negative impact.
• 10% - The type of credit on your record. Small finance company loans, signature loans, furniture loans, and retail store loans have a negative effect on your score, due to high interest rates.

8) Take steps to improve your credit score.
      

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