Your Credit in Purchasing a Home

What does credit mean when it comes to purchasing a home? Credit is a lender’s show of confidence that you will pay back a loan by a future date. And one of the most important things to remember about credit is that failing to maintain a good credit rating may prevent you from realizing the dream of home ownership.

Information contained in a credit report that is furnished through a credit bureau is available to individual firms, mortgage and loan companies, etc., who then make the actual decision on whether, under their own policies and guidelines, they will grant you credit. The credit bureau itself does not rate your credit or recommend whether or not your credit application is to be accepted or rejected. Each credit grantor decides that on the basis of many factors, such as total income, the amount of credit applied for, and the effect it will have on your total indebtedness, as well as length of employment and length of time at your current address.

Information in your credit file typically includes such facts as your name, address, birth date, job, present and previous employers, the manner in which you have paid your bills (as reported by your creditors) and whether you have filed for bankruptcy or had a tax lien or judgment recorded against you.

As you can see, information in your credit file is critical in the decision for a mortgage company or loan association to grant you the credit necessary to secure the home you want. Remember that many lenders require at least two years of good credit. To start building a good credit history, concentrate on establishing a solid employment history and open a savings and checking account. You also should consider applying for a low-interest credit card to show that you are willing and able to make debt payments.

To obtain a copy of your credit report, visit you local credit bureau and for a nominal fee, you can obtain a copy of your report and review it with a credit bureau consumer relations individual. Your report can be obtained at no charge if you have recently been denied credit. (A listing of local "Credit Reporting Agencies" can be found in your Yellow Pages.)

Or, you may request a copy by mail. Include information such as your full name, spouse’s name (if applicable), address, social security number, birth date and employer information. Remember to sign your request. Contact your local credit bureau for mailing address and fee.

Adverse information, by law, must be removed from an individual’s credit report after it is seven years old. Bankruptcies, however, may remain as part of the report for 10 years.

If you have reason to question the accuracy of any item of information on your report, the credit bureau will contact the source and any inaccurate information will be deleted or corrected. If after re-verification you continue to dispute the information, you may submit a statement no longer than 100 words, which will be entered into your record.

Any of the members of the Daytona Beach Area Association of REALTORS® will be happy to assist you in any way they can in making your dream of home ownership a reality.