• Credit Basics
• Credit Scores
• Identity Theft
• Credit Disputes
• Improve your Credit
• Mortgage Preparation

Credit Report Resources

• Check your credit report, make sure your credit history is healthy and accurate. Aim to raise your credit score above 650 in order to qualify for most prime loans.
• If your credit score is not quite 650, focus your efforts on paying bills on time, reducing your debt balances, avoiding new inquiries and clearing negative inaccuracies from your credit report. It is possible to improve your credit score quite a bit over a few months so that you'll be able to qualify for a lower mortgage rate when you're ready to finance your home.
• Make sure the information on your credit report is correct and fix any problems you discover. Give yourself 30-90 days for correcting inaccuracies. By fixing any inaccuracies, you may be able to raise your credit score, which will reduce your mortgage rates.
• Found an error while reviewing your credit with the lender? Ask about the “rapid rescoring” process where you can submit a dispute and potentially improve your credit score in 72 hours.
• For a complete understanding of your credit history, check your 3-in-1 Credit Report and Credit Scores online.

• Most borrowers, whether or not you have poor credit, can afford a home that runs about two-and-one-half times their annual salary.
• Calculate your loan-to-value ratio to see how much you can afford to borrow by dividing the loan amount by the property’s value. If your loan-to-value ratio is above 80 percent your rates may increase significantly. Find a less expensive home or save up for a down payment to lower this percentage.
• Calculate your debt-to-income ratio by adding up your monthly debts and dividing by your monthly income. A debt-to-income ratio under 20-39 percent is usually considered good and will help you be perceived as financially stable.
• Don’t be afraid to start small. Just because you may qualify for a large loan doesn’t mean that it is a smart financial decision to buy as large a home as possible. Take a careful look at your family budget and your housing needs before you decide how much you can really afford.

• Fixed rate mortgages have a set monthly payment that remains constant through the life of the loan. The interest rates tend to be a bit higher on fixed rate loans.
• Adjustable rate mortgages give you a lower initial interest rate with the risk of it rising in years to come. If interest rates decrease you will have an advantage over fixed rate borrowers. Setting a rate cap about 5-6 percent above your initial rate will protect you from extreme jumps in interest rates.

Improving your credit finances before you start to shop can help you save money on your mortgage loans. Reducing your mortgage loan rate by just a point you can potentially save about $50,000 over the life of a $200,000 loan.

Improving your mortage rate

You can improve your rates and save thousands on your loan by improving the three most important loan factors.

If your credit score target is aboce 650,

• Clear inaccuracies from your credit report
• Pay your bills on time for at least 6 months
• Avoid unnecessary applications for credit
• Reduce your debts to below 50% of their credit limits

If your debt to income ratio target is 20% - 30%,

• Pay off small loans
• Reduce your credit card balances
• Increase your income by co-signing with your spouse

If your loan to value ratio target is less than 80%,

• Increase your down payment to at least 20% of your new home or car's value
• Negotiate to reduce the price with the seller
• Select a less expensive home or car to purchase