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Available home buying resources on the web at ourfamilyplace.com: house buying checklist and buying your first home, etc.

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A consumer's guide to motgage settlement cost at the Federal Reserve Board with settlement cost worksheet

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Homeownership assistance programs at Pennsylvania.

Improve your credit score

Take These Steps to Improve Your Credit Score

A credit score reflects credit payment patterns over time, with more emphasis on recent information. You can check your credit report to read a summary of what goes into your credit score.

• Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
• Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score.
• Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score.
• Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
• Protect your credit information from fraud and identity theft

Pay Your Bills on Time (and other important tips)

Paying your bills on time is the most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should:

• Minimize outstanding debt
• Avoid overextending yourself
• Refrain from applying for credit needlessly

Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly.

It Takes Time to Improve Credit Scores

If you have negative information on your credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you may want to pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores.

How Changes Affect Scores

One common question involves understanding how very specific actions will affect a credit score. For example, will closing two of your revolving accounts improve your credit score? While this question may appear to be easy to answer, there are many factors to consider.

• Credit scores are based entirely on the information found on an individual’s credit report.
• Any change to the credit report could affect the individual’s credit score.

Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).

One change actually affects many items on the credit report. It is impossible to provide a completely accurate assessment of how one specific action will affect a person’s credit score. This is why the credit risk factors provided with your score are important. They identify what elements from your credit history are having the greatest impact so that you can take appropriate action.

How Long Does It Take to Rebuild a Credit Score?

Actually, you don’t rebuild the credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age.

• Delinquencies remain on your credit report for seven years.
• Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 15 years.
• Inquiries remain on your report for two years.

Understanding credit scores

Types of Credit Scores

There are primarily two types of credit scores: generic scores and custom scores. Generic scores may be used by many types of lenders and business to determine general credit risk. Custom credit scores are developed for use by individual lenders, who rely on credit reports and other information, such as account history, from their own portfolios. Custom scores are unique to that specific business's. There are also credit scores for specific types of lenders, such as credit unions, and for specific types of lending, such as mortgage lending or auto lending.

VantageScore®

VantageScore® is the first generic credit score developed cooperatively by Experian and the other national credit reporting agencies. This score uses the same formula across all three credit reporting agencies.

Why Lenders Use Credit Scores

Before credit scores, lenders physically looked over each applicant’s credit report to determine whether to grant credit. A lender might have denied credit based on a subjective judgment that a consumer already held too much debt or had too many recent late payments. Not only was this time-consuming, but human judgment also was prone to mistakes and bias. Lenders used personal opinions to make a decision about an applicant that may have had little bearing on the applicant’s ability to repay debt.

Today, credit scores help lenders assess risk more fairly because they are consistent and objective. Consumers also benefit from this method. No matter who you are as a person, your credit score reflects only your likelihood to repay debt responsibly based on your past credit history and current credit status.

Understanding Credit Scores

Credit score factors are the elements from your credit report that shape your credit scores. For example, your total debt, types of accounts, number of late payments and age of accounts affect credit scores. Such factors indicate what elements of your credit history most affected the credit score at the time it was calculated.

Understanding the credit score factors is the key to improving your credit scores. The factors tell you what you must address in your credit history to become more creditworthy over time. Credit factors usually are consistent from one credit score can help you improve all credit scores.

How a Good Credit Score Is Determined

Developers of credit scoring models review a set of consumers — often more than 1 million. The historical credit profiles of these consumers are examined to identify common variables. The developers then build statistical models by selecting the credit variables most predictive of future behavior and assigning appropriate weights to each variable.
The score is influenced by several factors:

What is a good credit score?

What Is a Good Credit Score?

Because there are many different scoring systems with different scales, a “good” credit score depends on the scoring system used by your particular lender. Most credit scores fall between 600 and 750. In general, a score above 700 usually suggests good credit management.

What’s In a Credit Score?

The information that impacts a credit score varies depending on the score being used. Credit scores are affected by elements in your credit report, such as:

• Number and Severity of Late Payments
• Type, number and age of accounts
• Total debt
• Public records

Credit scores do not consider the following information:

• Your race, color, religion, national origin, sex or marital status. U.S. law prohibits credit scoring from considering these facts, any receipt of public assistance or the exercise of any consumer right under the Consumer Credit Protection Act.
• Your age.
• Your salary, occupation, title, employer, date employed or employment history. However, lenders may consider this information in making their approval decisions.
• Where you live.
• Certain types of inquiries (requests for your credit report). The score does not count “consumer disclosure inquiry” requests you have made for your credit report in order to check it. It also does not count “promotional inquiry” requests made by lenders in order to make a “preapproved” credit offer or “account review inquiry” requests made by lenders to review your account with them. Finally, inquiries for employment purposes are not counted.

How a Good Credit Score is Determined

Developers of credit scoring models review a set of consumers — often more than a million. The historical credit profiles of these consumers are examined to identify common variables. The developers then build statistical models by selecting the credit variables most predictive of future behavior and assigning appropriate weights to each variable.

“The biggest driving factor to a score is delinquency payments or payment history,” explained Arlene Dang, Manager of Analytics for Experian.

All about credit

Credit advice at Experian.com

Credit plays an important role in our lives every day and at life’s most significant moments. Whether you’re a college student, a working professional, a parent or a widower, building and maintaining good credit is essential. Major purchases such as a house or a car, and even employment opportunities, can be dependent on a good credit history.

What is credit?

Credit is borrowed money that you can use to purchase goods and services when you need them. You get credit from a credit grantor, whom you agree to pay back the amount you spent, plus applicable finance charges, at an agreed-upon time.

There are four types of credit:

1. Revolving credit. With revolving credit, you are given a maximum credit limit, and you can make charges up to that limit. Each month, you carry a balance (or revolve the debt) and make a payment. Most credit cards are a form of revolving credit.

2. Charge cards. While they often look like revolving credit cards and are used in the same way, charge accounts differ in that you must pay the total balance every month.

3. Service credit. Your agreements with service providers are all credit arrangements. You receive electricity, cellular phone service, gym membership, etc., with the agreement that you will pay for them each month. Not all service accounts are reported in your credit history.

4. Installment credit. With installment credit, a creditor loans you a specific amount of money, and you agree to repay the money and interest in regular installments of a fixed amount over a set period of time. Car loans and mortgages are two examples of installment credit.

Why do you need credit?

Good credit is necessary if you plan to use credit to make a major purchase, such as a car or a home, or want to be able to take advantage of the convenience credit can provide. The importance of good credit also extends beyond purchases, in that your credit information may be used by potential employers and landlords as part of the selection process.

Credit grantors review credit applications and credit reports to determine financial risk: If they lend you money, extend you credit or give you goods and services, will you pay them back? They may consider your income, how long you’ve lived at your present address, how long you’ve worked for the same employer, what kinds of assets you have and the balances of your bank accounts. Often, though, the primary resource guiding their decision is your credit information.

How do you establish credit?

Getting your first line of credit can sometimes be challenging. If you don’t have a credit history or if you have filed for bankruptcy in the past, credit grantors may be reluctant to extend you credit.

You can establish credit in three ways:

1. Start small and build up. A local department store or bank is a good first step. Before you apply, ask the credit grantor if it regularly reports your bill-paying history to a credit reporting company, which will help you establish a history of responsible credit use.

2. Get a cosigner. You can ask a parent, a family member or a friend with an established history of good credit to cosign a loan or credit card application for you. Make sure you pay as agreed, since you are putting your cosigner’s good credit at risk.

3. Apply for a secured credit card. To obtain a secured credit card, you open and maintain a savings account as security for your line of credit, which is a percentage of your deposit.

If you’re turned down for credit, ask the credit grantor for specific reasons. If your income is not high enough or you haven’t lived at your current address long enough, you can reapply for credit when your situation changes.

After a few months of using your credit card and consistently paying your bills on time, you should apply for another card. Continue using your credit card, keeping your balances low and paying your bills on time. Before you know it, you won’t have to ask for credit — grantors will come to you.

How do you build good credit?

Your credit report acts as your financial references when you apply for new credit. The only way to build a good credit history is to use credit wisely.

Following are 10 tried and true tips for building credit:

1. Set a budget and live within it. Credit should not be used to live beyond your means.
2. Provide complete, accurate and consistent identification on your credit applications. This information helps set up your credit history correctly from the beginning, ensures that your new accounts will be matched to the correct report and minimizes the chance that your credit file will be incomplete.
3. Pay your bills on time. Late payments, called delinquencies, negatively affect your ability to get credit since they indicate a stronger likelihood that you will make late payments again or will be unable to pay your debts in the future.
4. Have some credit, but not too much. Having no credit history is almost as bad as having a negative credit history, and you only need a few accounts reported to the credit reporting companies to demonstrate credit management.
5. Have a mixture of credit types. It is good to have a history of repaying an installment loan, but a revolving account demonstrates more clearly that you can responsibly manage credit.
6. Keep credit card balances low. Keeping your balances low compared with credit limits shows that you aren’t tempted to charge more than you can pay. By charging a small amount on at least one card and paying the balance on time, you will show that you can handle larger amounts of available credit.
7. Use caution when closing accounts. Closing an account isn’t always a good thing. It can result in an increase to your balance-to-limit ratio, making you appear to be an increased credit risk.
8. Be aware of your debt-to-income ratio. Mortgage lenders consider your monthly payments compared with your monthly income.
9. Demonstrate stability. In making credit decisions, some creditors consider your length of employment, length of residence, whether you own or rent and if you have any savings.
10. Contact your lenders if you fall behind on your payments. Many lenders will work with you to set up a different payment schedule or interest rate.