Credit scores, credit history, improving your credit, using your credit wisely, etc. All of these have an impact on buying a home. Home buyers, especially first time buyers, can be confused about how your credit affects your ability to buy a home. If you're wanting to buy a home in Prattville or anywhere else in the River Region, you're going to need to know how your credit affects your ability to buy a home for sale, and how some things you do will help your credit, and some things you do will hurt your credit.
Have you checked your own credit report and credit score? Did you even know that you could do this? Well, you can. You can get your credit report for free at www.annualcreditreport.com. Just fill out the online application and you can instantly view and even print out your own credit report. Federal law allows you to get one copy of your credit report for free each year. There are three credit reporting agencies, and you'll pick which agency you want the credit report from. You can get one agency's report or get all three of them - it's your choice. It's important for you to check your own credit before trying to buy a home. In fact, it's important to do this before you even start looking at homes for sale.
If you want to see your credit score, you will be charged a small fee. The credit score is calculated by the credit reporting agency. A credit score is a number that lenders and creditors use to help them decide whether to offer you credit or loan you money. If your credit score is high, then creditors and lenders will see you as a good risk. If your score is low, then they will see you as a poor risk.
But here's something that a lot of home buyers don't know. The credit score you pay for may be different from the credit score that a lender will see. In fact, usually the credit score that a lender sees is lower than the credit score you get when you order your own credit report! Why is this? Well, it's all due to the way the credit score is calculated. Lenders and other creditors use a different calculation than the calculation used for the credit score you pay for yourself.
The highest overall credit score you will see is the one that you pay for yourself. This is because it is for your information only and isn't based on someone offering you credit or a loan. The next highest overall credit score will be for a creditor like a credit card or an auto loan. This credit score is lower because they are putting more weight on parts of your credit score, like your payment history or whether or not you've been late on any accounts recently. Since they are considering giving you credit or financing an auto loan for you, they want to know that you will pay your account in full and on time. The lowest overall credit score is going to be for a mortgage loan. This is because the mortgage lender is going to put more weight on many more parts of your credit score than other creditors will. They will want to know how much of your credit you're using (for instance, they want to know your outstanding balance on a credit card compared to how much available credit you have on that card) and whether or not you've had accounts go to collections or have had several accounts paid late. A mortgage lender is going to want to know that you will pay your house payment on time before they will give you a loan to buy one of the homes for sale on the market.
So if you order your own credit report before you buy a home (which is a really good idea for first time buyers 
and for any home buyers) and pay for your own credit score, you're probably going to find that the credit score your mortgage company uses is lower than the one you paid for yourself.
Oh, and let's clear up a myth before we go any further. There's a myth going around that if you order your own credit report, then that will automatically lower your credit score. This is not true! Your credit score is never lowered just because you ordered your own credit report! If you order your own credit report, then your credit score will not be affected at all.
The next article is going to be about what goes into calculating your credit score.
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