Understanding Your Credit Score Credit reporting agencies or credit bureaus, collect information about consumers' financial affairs and sell that information to their business members, such as credit grantors, employers and insurance companies.  The credit bureaus charge annual fees as well as a fee for each credit report requested by members.  Credit scores, along with your overall income and debt, are a big factor in determining if you'll qualify for a loan and what loan terms you'll be able to qualify for.  Scores range between 200 and 800. Scores above 620 are considered desirable for obtaining a mortgage.   You can contact one of the 3 major Credit Bureaus to obtain a copy of your credit report. Factors that affect your credit store include:

Credit Credit Score  A+  750 and Higher  A  720 to 740  A-  680 to 699  B+  660 to 679  B  640 to 659  C+  620 to 639  C  600 to 619  D-F  599 and Below

	Your Payment History. Whether you paid credit card obligations on time
	How Much You Owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.
	The Length of Your Credit History. In general the longer the better.
	How Much New Credit You Have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.
	The Types of Credit You Use. Generally, it's desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.
The following tips will help you improve your credit score:
	Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.
	Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.
	Don't charge your credit cards to the maximum limit.
	Wait 12 months after credit difficulties to apply for a mortgage. You're penalized less for problems after a year.
	Don't order items for your new home you'll buy on credit—such as appliances—until after the loan is approved. The amounts will add to your debt.
	Don't open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.
	Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
	Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

 
This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, Knowing and Understanding Your Credit, visit http://www.homebuyingguide.org