It is every person’s dream to have a home of their own and it is indeed a fact that buying a home requires a huge amount of investment. The chances of being one step closer to buying a home requires you to have a close look at your credit report. A credit report is a financial statement that shows an individual’s payment history. Lenders and creditors investigate a person’s credit report since it shows a person’s financial capabilities, financial stability and payment behavior. It becomes their basis on whether they should approve you a loan or not.

Buying a home with a poor score results in paying more

Having a good credit report entails you convenience in getting prime loans and lower interest rates which allow you to make smaller monthly payments. On the other hand, a bad credit report usually translates into subprime loans and higher interest rates. The definition of a good credit report and bad credit report usually vary from lender to lender but the average “good” score for a first time home buyer would always be around 640. Moreover, some lenders aid people who have lower scores but only under certain circumstances.

Experts suggest that a person’s debt versus income ratio be one of the vital factors when being approved a loan. Lenders have a rule that the house payment should never exceed approximately 31 percent of the gross monthly income.

Here are certain aspects which have to be taken into consideration that will also help in improving your file and >credit score.

• One major factor that influence your credit score is your payment history and if you are paying your bills on time.

• Amounts owed by you are another major factor. Your score can fall due to high credit card utilization or owing a lot of money on several accounts.

• Length of credit history, new credit and types of credit in use are several other factors that can create an impact on your credit report.

• It is desired to acquire your annual credit report from all three credit bureaus, Equifax, Experian and Transunion. Every U.S. citizen can acquire his or her free credit reports, once a year from each credit agency.

• Potential homebuyers should request for all three statements from the agencies and must check them for inaccuracies. In case you come across anything wrong, report it immediately to the credit bureaus.

• Lenders also investigate your credit report, and most of them make use of merged credit statements. The “blender” file incorporates public records for liens, judgments, bankruptcies and foreclosures.

Author's Bio: 

Get your credit report and credit score now and check for any errors, discrepancy, identity theft or bad credit. To keep your credit score high, it is important to keep a track on the 3 bureau credit report regularly.