If you are considering purchasing a home, you will want to have a good credit score. The better your credit score, the better chance you have of qualifying for a mortgage and it may help you get a better interest rate. Credit scores can range from not having one at all up to 850. Below is a rundown of what figures into your credit score. By making sure you are doing what credit reports check, you can increase your credit score.

• About 35% of your credit score is based on your payment history. Pretty simple really, you get a bill, you pay it on time your score goes up, you pay it late, your score goes down.
• Another 30% or so of your score is based on your credit utilization. Are you paying down your debt? Is your credit maxed out? Keep you debt to a minimum, pay it down and don’t use all the credit you have available in order to increase your credit score.
• Some 15% of your score is based on how long your credit history is. The longer you have been paying your bills on time the better.
• Around 10% is based on using different types of credit. A mortgage, a revolving credit card, a personal loan are all good as long as you pay on time and are paying down the balance.
• The last 10% is based on report requests. If you are opening up a lot of accounts or purchasing a lot of items that require a credit check in a short time period this will negatively impact your credit score.

What is a good credit score? In general 680-720 is good, over 720 is excellent. Anything much under 600 may keep you from qualifying for a mortgage. If you have a very low score you may want to speak with a banking professional for assistance in repairing your credit.

Are you getting ready to refinance your home or are you getting ready to purchase a home?  There are a few things that you need to put on hold if you are considering doing either in the near future.  Remember the bank is looking for someone with a stable income and a good credit history.  One of the biggest mistakes people make is to purchase a new vehicle just before applying for a mortgage or even worse after they have already started the process.  Banks see this as a big red flag and it may cost you the financing for your home.  Hard as it may be, unless you are paying cash, wait until your refinancing is done or you have closed on your home before buying that vehicle.  A few other tips – don’t apply for new credit cards or credit line increases, don’t do anything that involves having your credit score checked.  These may seem obvious, but many people forget all about this and end up in a real mess trying to get their financing pushed through.  The whole process will only take a few months, so unless an emergency situation occurs, exercise patience and leave your banking and credit alone to get your home refinanced or your new home purchased.  Check with your loan officer for more details on what you can and cannot do.

If you are thinking about purchasing a home a good credit score is a must.  Depending on how you think your credit is and where you are in the buying process determines your next steps.  If you are buying in the near future, your loan officer will be able to check your credit for you and will determine if you need to do anything to improve your score or not.  If you are not buying right away or are unsure as to how your credit looks you may want to get a free copy of your credit report and also work on improving your credit score before going to a mortgage banker.

AnnualCreditReport.com is the site to go to once a year to check your credit report and it is free of charge.  It is a good idea to check it yearly just to make sure the information is current and correct, even credit bureaus make mistakes.

If you are just looking to increase your credit score there are a few simple things you can do to bring it up.

• Pay your bills on time, no late payments on any bills at any time and pay your bills in full if possible
• Pay all your bills on time including credit cards, medical bills, student loans, utility bills, all bills
• Keep your credit card balances low, credit reports like to see no more than 30% of your limit on your card being used, if you have a higher balance and pay it, that is fine but it may ding your score a bit, maybe try getting a higher limit
• Don’t open lots of different credit cards with stores, gas station and other places, keep the number of cards to a minimum and pay them off each month if possible

This may seem like basic information, but it is always surprising how many people have poor credit scores and don’t know why. Follow these tips to get your score up to par.

Have you wondered how buying a home after a short sale or foreclosure works?  Since the housing market crisis, many people have found themselves selling their home as a short sale or they have been through a foreclosure.  The majority of these former homeowners has either found living arrangements with family or friends or has been in a rental property since they could not buy a home after a short sale or foreclosure.

With the great interest rates and low home prices many of these people would like to buy their own home again but how does that work?  Depending on the situation, they may qualify for a loan in as little as 3 years!

If someone was foreclosed on, FHA requires a 36 month waiting period and Fannie Mae or Freddie Mac require 84 months from the completion of the foreclosure.

If someone sold in a short sale, FHA requires a 36 month waiting period, Fannie Mae requires 72 months and Freddie Mac 48 months.

These numbers are general guidelines, there are extenuating circumstances, other types of loans and the time may vary from state to state.  If it has been at least 3 years since the short sale or foreclosure was completed, contact a mortgage professional to see if you may qualify for a mortgage to purchase a home.  In the meantime, work on your credit score, pay your bills on time and do not take on excessive amounts of debt.