• Credit to Debt Ratio — How much do you owe versus your available credit?
• Credit Inquiries — How many times has your credit history been accessed by someone other than you?
• Types of Credit — Do you have a healthy mix of credit cards and loans?
• Payment History — How often do you make late payments?

When you pull your credit report, you'll see that you actually have three reports. Experian, Equifax and TransUnion — three of the major credit reporting agencies — use a slightly different models to calculate your credit rating. FICO is used by Experian. Equifax's model is called BEACON and TransUnion uses EMPIRICA. As a result, you have three scores, one for each scoring model.

Lenders want to make sure that giving you a loan is a safe move. Your credit score gives lenders view of what type of borrower you are solely because of your credit history. You'll need a score of at least 740 to get a acceptable interest rate. You can qualify for a loan with a lower score, but the interest accrued in the long run could be more than double that of someone with a superior credit score.

You want a higher score, but how do you get there? Building your FICO score takes time. It's difficult to make a significant stride change in your FICO score with quick fixes, but your score can improve in a year or two by monitoring your credit report and by using your credit wisely. The best way to do this is to know your FICO score. Here are some methods to improve your credit score:

Apply for gas cards or chain store credit. For those who have non-existent credit or less-than-stellar credit, chain store credit cards and gas credit cards are ways to establish your credit history, increase your spending limits and stay on top of your payments, which will raise your FICO score. Simply beware of holding a too-high balance for more than a couple of billing cycles because these types of cards more than likely have a higher interest rate. Keep your cards active. Whether you have older cards, or are just getting started with credit, use your cards to make sure your accounts stay active. But, pay them off in one or two payments. Pay on time. Your FICO score plummets with every account that goes to collections. It's where people who have recently been unemployed see the biggest hit in their credit score. Yes, it takes longer to restore your credit with payment history, but it's the surest way to show that you're able to make payments to a bank. Correct your credit report. If you find mistakes on your credit report, contact the bureau asking that the item be removed. If you have a common name or the same name as a family member, you'll want to pay extra attention to make sure the activity reported is correct. Spread your debt around. At first, this doesn't sound like a good idea. But, you don't want to have one card that is maxed out and have your remaining cards at a zero balance. It's better to have each of your cards at about 25% of their credit limit than to have the most of your debt taking up the balance one card.

Now that you know more about credit reporting, you'll be able to successfully take the first steps to homeownership, and that is improving your FICO score. Keep in mind that when it's time to apply for a loan to purchase a home, you'll want to keep your credit inquiries within a two-week window to avoid damaging your credit score. With the help of Martha Bethel, the loan application process can be a stress-free experience so you, too, can become a homeowner.

Learn more about FICO scores at http://www.myfico.com/, Fair Isaac's informational site and once per year, for free, you can review all three of your credit reports at http://www.annualcreditreport.com/. And, for a small payment, you can get your FICO score from each bureau on their websites: http://www.equifax.com/, http://www.experian.com/ and http://www.transunion.com.i/

I don't judge you based on your credit scores and can help you step into home ownership with the right lender. E-mail me at mbethel@weigand.com or call 316-993-8506 for additional information.