Tundraco's Daily Living Guide to Money Understanding Your Credit History

Credit is one of those things that most people tend not to think about - that is until they need it. When buying a home, your past credit history becomes an important factor is your ability to qualify for a mortgage. Therefore, it is important that you read and understand your credit report.

• A good credit history, combined with a good income will help you breeze through the mortgage application processes.

• If your credit history has a few blemishes, it is best to learn about them now. This will enable you to start correcting any defects, such as paying off past due debts.

It is important to check your credit report to see if you have any credit and to see if you any old debts that you forgot about. It is also important to check your history to make sure that there are no mistakes on it.

• If you find that you have some old debts, clean up your record by paying them off.

• If you find a mistake, contact the reporting agency immediately so that the erroneous information can be removed.

Your credit history has a long life. Bad marks, such as being delinquent on a payment, can follow you for upwards of seven years. A bankruptcy can haunt you for ten years.

When you check your credit rating, you may be surprised to learn that you don't have any credit, either good or bad.

• When a mortgage lender is looking at your credit rating, they want to see how you handled past debts. If you never had any, they have nothing to judge your credit worthiness on.

• The most simple is to get a credit card, make a few charges, and then pay it off.

• Another method is to take out a personal loan from your bank, and pay it back.

If you have really bad credit, such as recently declaring bankruptcy, you may still be able to get a mortgage, but it will cost you…

• You will be required to pay a higher than normal down payment.

• You will normally be required to pay a higher interest rate on the loan.

Even if your credit history is abysmal, you do not have to give up your dreams of home ownership. Most people turned down for a bank mortgage can obtain one from a mortgage broker who specializes in high-risk loans.