Understanding your credit history

The key to qualifying for a loan is credit. The better your credit, the more likely you are to get the loan you need at the rate you want.

Before potential homebuyers think about purchasing property, they should find out their credit rating. Credit reports are available from three national credit bureaus. To get a report, homebuyers can contact Equifax (1-800-685-1111), Experian (1-888-397-3742) or Trans Union (1-800-916-8800) directly, or talk with their lenders. The higher the score, the easier it is to get a loan.

After receiving the report, homebuyers should carefully check it to make sure it matches their own records and should then contact the credit company if there are any discrepancies.

Next, potential homebuyers should pay off as much of their credit debt and high-interest loans as they can, and should wait to make big purchases on credit, such as a car, until their debt is low.

If people find they have bad marks from creditors, they should resolve the problem that caused the bad mark and then ask the creditor to remove the negative mark from their record.

Even with a bad credit history, it can still be possible to get a good loan. If people have been on-time with more recent credit payments, or if they have explanations for their poor credit history such as divorce, unemployment and illness, lenders will sometimes be lenient.