First Step for Buyer: Find Out Your Credit Score

Among the very first steps prospective home buyers should take on their path to home ownership is to find out their credit score and address any errors on their report.
By: Robert Bruss: REALTOR® Magazine Online
You can help them get started by educating them about how credit scores work: When deciding whether to lend, mortgage lenders consider the FICO (Fair Isaac Corp.) score, which is based on credit history, the percentage of available total credit being used, and the buyer’s record of on-time bill payments.

A credit score above 750 (850 is the maximum) will net a buyer most mortgage lenders’ best rates. If customers discover they have a credit score of less than 680, that doesn't necessarily mean they'll have trouble getting a mortgage, but they may pay more for it than someone with a higher score.

However, buyers with credit scores of less than 620 should look for a lender who routinely handles mortgages for subprime buyers because they will probably offer more options for that customer.

The first step for a buyer who doesn’t know his credit score is to obtain his credit report. The best place to obtain a FICO score and credit reports from all three credit-reporting agencies is at www.myfico.com. The report costs $45. If there are errors, the potential home buyer can ask the credit bureaus to fix the incorrect information. Credit bureaus have 30 days to verify the information and remove anything that is wrong.