The most important factors in determining how much mortgage you can afford include gross household income, down payment, debt such as credit card bills and/or loan payments, property tax, and credit score. Your credit score is a key factor because it will dictate the mortgage interest rate that you are able to obtain when negotiating with a lender. It is your credit score which measures the amount of risk you pose to the lenders.

What are the costs of bad credit ?

An individual with a excellent credit could get a 30 year mortgage at 6.25% but with bad credit that same mortgage will run at 10.625%.

Lets have a closer look!

If you were looking at obtaining a 200,000 mortgage, you would expect your monthly payments to be:

• Good Credit $1200.00
• Mildly Damaged Credit $1375.00
• Damaged Credit $1700.00

Even with mildly damaged credit your loan is costing an extra $175.00/month and with damaged credit you are spending an extra $500.00/month.

With bad credit a typical home can cost between $50,000 to $200,000 more in interest charges over the lifetime of the loan.

How can I get my credit score ?

Under the FACT Act amendments to the Fair Credit Reporting Act, you can obtain a free credit report and credit score every 12 month period from the credit reporting agencies ( CRA ) . These credit bureaus collect and maintain information on the vast majority of Americans , but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations that sell your personal information for money.

Hmmm! Think with all those records that are being collected that any errors could me made?

Well, back in 2004 a study was conducted by the Public Interest Research Groups, and found that as many as 79% of credit reports have errors - 25% of which are serious enough to potentially result in a credit denial.

Yes an error/s on your credit report can lower your credit score thus give you a higher interest rate on your mortgage.

Can you fix your credit report ?

The Fair Credit Reporting Act, a Federal Law allows a consumer to challenge the completeness and accuracy of their credit report with credit bureau. If the disputed information in the report is found not to be accurate and cannot be verified within a reasonable period of time, the credit bureau will delete such information. Reasonable period of time is deemed to be 30 days.

If you are considering applying for a mortgage, order a copy of your credit report. A credit report is the first thing a potential lender will be looking at. Don't assume that even though you pay your bills on time, that all the information in your credit file is up-to-date and accurate.

Would you like to learn about improving your credit score by repairing your credit report which will put money back into your hands and out of the creditor's pockets?

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