• Identifying / Personal Data - The information is this section will include your name, your social security number, and other pieces of identifying data. This information is used for identification only and does not contribute to your credit score one way or the other.
• Trade Line Info - This section will typically include any credit accounts you currently have, such as credit cards and car loans. It will also include details about each account, such as the date you opened it and your history of payments (important detail, to be covered later).
• Past Credit Inquiries - This includes the number of times somebody has requested a copy of your credit report within the last two years, such as when you buy a new car or apply for a loan of some kind.
• Collection Information - If you've had a case of overdue debt or missed payments in the past, and the case was turned over to a collection agency, that information will likely show up in this section of your credit report.

A couple of notes about the information listed above:

Payment history (mentioned within "trade line info") is arguably the most important part of your credit report, because it carries the most weight when your report is converted into a credit score. In other words, paying all your bills on time can help you maintain a good credit score.

You should also review the items listed above with an eye out for errors. For example, maybe your social security number is listed incorrectly, or maybe there's a collection notice that never really took place.

So what do you do if you find a mistake in your credit report? In these cases, you should fill out a correction request at the website of the agency that produced the erroneous document. For example, if you found a mistake in the credit report from Experian, you would visit the "Disputes" section of their website to submit a correction request.

Now that you have a better understanding of credit reports, let's talk about how those reports become credit scores... Your Credit Scores
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Your credit score is based on information found within your credit reports, which (as we have discussed) are maintained by the three credit-reporting agencies. Three agencies, three reports, three credit scores ... all about you!

Your history of payments on things like credit cards and car loans is a major part of your credit score, accounting for somewhere around 35% of the total number. It only makes sense why this history would be important to mortgage lenders, but it shows how you've done over the years in terms of paying back loans.

Your total amount of debt is another big component of your credit score. For example, if you have a lot of debt (perhaps more than you can afford to pay off), then your credit score will reflect this. And it won't help your cause any when applying for a mortgage loan.

Your credit score is also referred to as your FICO score, and mortgage lenders will review this score to determine your "credit worthiness" — meaning how safe or risky it would be to loan you money.

FICO is a computerized credit-scoring model named after the Fair Isaac Corporation, the company that developed it decades ago.

The big three credit-reporting bureaus — Experian, Equifax and TransUnion — use the FICO scoring model to convert your credit history into a credit score. Mortgage lenders in turn use that score to decide whether or not you qualify for a mortgage loan, and to determine what interest rate you'll pay.

Of course, there are other factors that influence these decisions, but FICO plays a leading role. In other words, your FICO score helps mortgage lenders determine your credit worthiness, how likely you are to pay off your debt, and what risk category you fall into.

The higher your FICO score the better, as evidenced by the scoring brackets below:

When your credit score is good you will have a much easier time qualifying for a mortgage loan. But when your score is bad, the opposite is true — you will have a harder time qualifying for a loan, and you will likely pay a higher interest rate when you do get qualified.

But what is a good credit score and, more importantly, how can you achieve one?Credit scores range from 300 to 850, and a higher score is definitely better. The higher your credit score, the easier time you will have getting qualified for a mortgage loan. You will also generally pay a lower interest rate on your mortgage when your credit score is high, and this equates to genuine (and often significant) savings over the life of your loan!

So what is a good credit score in the United States, and how can you put yourself into that range (or even higher)? Let's take a look.

Ask a dozen credit experts what makes a good credit score, and you're likely to get a dozen different responses / ranges. So for this tutorial, we have taken ten articles on this subject from ten reputable websites and averaged them out. Based on this "scientific" analysis, here's what the experts have to say on the subject of good credit scores...

750 or above — If your credit score falls into the range, you should consider yourself lucky (or perhaps just financially responsible). This range is considered to be an excellent score by most mortgage lenders. As a result, you will likely have a much easier time qualifying for a mortgage and getting a good interest rate on the loan.

700 to 750 — Credit scores within this range are somewhere between very good and excellent. With many mortgage lenders, there seems to be an "invisible line" at the 700 mark, with regard to what is considered excellent credit. So 700 and up is a great "neighborhood" to be in.

650 to 700 — In general, a credit score that falls within this range is considered to be good or even very good, depending on the mortgage lender.

600 to 650 — Now we are closing in on the most common definition of "good credit" among most mortgage lenders. A score in this range is not "very good" or "excellent," but then again it's not sub-standard or bad either. So most lenders will view a person in this range as a reasonably qualified borrower. You won't necessarily get the best rates with a score in this range, but it's still considered a good credit score so approval should be likely.

Below 600 — If your credit score falls below the 600 range, a higher percentage of lenders will consider you to be a credit risk. You could still find a willing lender at this point, but you'll pay higher interest rates than a person with a good or excellent credit score. And this obviously translates to a larger mortgage payment each month.

What's important to note here is that people at the bottom of the scale (with scores in 400's or 500's) will have more trouble getting a mortgage loan these days than back in the 1990's. As a result of the mortgage crisis we discussed earlier, lenders have had to tighten their standards and are therefore less likely to make loans to borrowers with bad credit (subprime borrowers).

Of course, if you have a bad credit score, you shouldn't despair. There are plenty of things you can do to improve your credit, and that's exactly what we will talk about next.

In a certain sense, you have direct control over your credit score. Sure, it's computer by somebody else, but it's computer based on your actions. So by taking smarter financial actions, you can in turn improve your credit score.

Here are some things you can do to achieve a better credit score:

Pay your bills on time. This is one of the best things you can do to improve your credit, because it's given the most weight in the FICO scoring model. Paying your bills on time (credit cards, auto loans, etc.) will raise your credit score faster than any other single action. Of course, the opposite is true as well.

Keep credit card balances low. Do your best to reduce your debt, starting with any credit cards you have. This is the second most important factor that contributes to your FICO credit score. So now you have two marching orders — pay bills on time, and pay down your debt as much as possible.

Keep your debt-to-income ratio at 20% or lower. In other words, your overall debt should not total more than 20% of your net monthly income. If it does, focus on paying down the debt as quickly as possible.

Limit the number of loans / lines of credit that you apply for. Applying for credit too often can send the message that you cannot properly manager your finances. Use credit and sparingly ... only when you need it.

Most of the items on this list could be summarized as being financially responsible and managing debt wisely. Put these things in practice today, and your credit score will soon reflect your efforts!

I'm willing to be you've heard the term "subprime mortgage" or "subprime lender" recently. This mortgage crisis of 2007 - 2008 was one of the hottest news topics of that period, and

By way of definition, subprime lending is a way to grant home loans to borrowers with bad credit. A "subprime borrower" then is a person with bad credit who does not qualify for the top tier loan rates offered by the mortgage lender. In other words, a subprime borrower is a person who has had trouble paying back loans and credit lines in the past, and therefore represents a higher risk for the lender.

Here's why I'm telling you all of this:

As a result of the subprime mortgage crisis, tougher regulations have been imposed on the lending industry as a whole. This in turn means that lenders will place greater emphasis on credit scores when making loans, and also that fewer lenders will make loans to subprime borrowers. In fact, some of the largest subprime lenders of the 1990's are disappearing as I write this guide.

Here's what this means to you, as a home buyer:

Good credit has always been important when buying a home and applying for a mortgage loan. But these days it's even more important to have good credit, because the number of options for "bad credit home buying" are diminishing. That's the entire purpose of this guide, to help you understand the importance of maintaining a good credit score, and to show you ways to achieve it.

We hope you have found this guide useful, and we wish you all the best with your future home-buying experience.

In closing, we would like to offer some helpful resources with which you can continue your credit research:

• The three credit-reporting companies:
  Experian.com | Equifax.com | TransUnion.com
• Where to order your credit reports:
  AnnualCreditReport.com
• To learn more about your FICO / credit score:
  MyFICO.com
• Consumer Federation of America:
  Credit section of their website
• An FTC Consumer Alert:
  Fake Credit Report Sites
• The Credit Center at Home Buying Institute:
  Credit Information for Home Buyers
• The Credit Help Q&A blog:
  http://www.homebuyinginstitute.com/help/
• Consumer Guide by the FDIC:
  The New Climate for Mortgage Borrowers