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LENDERS PUT MORE EMPHASIS ON CREDIT
ABA Provides Tips on Improving Your Credit Score

The first step to acquiring a mortgage is ensuring that you have a good credit history, which helps secure a lower interest rate and lower monthly payments. During the housing boom, a score of 680 was enough to get a good interest rate, but today many lenders want a 740, even a 760, to qualify for the best rates. To improve your credit score, the American Bankers Association advises that consumers:

• Pay your bills on time. Payment history makes up 35 percent of your credit score, according to www.myfico.com. The longer you pay your bills on time the better your score. Avoid missed payment by putting as many of your bills on automatic pay as possible. Many banks offer automatic debits from accounts and online bill pay. 
                                                            
• Don't close old, paid off accounts. According to FICO, closing accounts can never help your score and can in fact damage it. Only apply for credit you need. Keep this in mind the next time a retailer offers you 10 percent off if you open an account.
  
  
• Talk to credit counselors if you're in trouble. Using legitimate, non-profit credit counseling can help you manage your debt and won't hurt your credit score. But avoid debt settlement; it will hurt your score since you're paying less than you owe. For more information on debt management, contact the National Foundation for Consumer Credit (www.nfcc.org).
  
  
• Evaluate your credit report annually. Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for other loans – such as a mortgage. Everyone is entitled to receive a free copy of his or her credit report annually from each credit reporting agency, but you must go through the Federal Trade Commission's Web site at www.annualcreditreport.com, or call 1-877-322-8228.
  
  
• Don't skim, read the fine print. A loan or credit card application is a contract, so read it thoroughly before signing. Be aware of introductory rates that expire, as well as the length of monthly billing cycles.
  
  
• Set a budget and stick to it. Developing a financial plan will help you keep your finances in order. Don't spend more than you can afford, and don't reach your credit limit or "max out" your cards.
  
  
• Comparison shop. Don't jump at the first appealing offer; compare rates and fees offered through mail solicitation, on the Internet, or at your local bank.