Another thing you should consider when deciding if you are ready to buy a home is your credit situation. Do you owe people or companies money? Do you have a lot of credit card debt?

A lender will examine your credit history to see if you have a good history of paying back the people or companies that you owe. The lender wants to make sure you will repay the money he/she is loaning you.

In this section, you will learn about what makes up a credit history, how to get a copy of your credit report and ways to improve your credit score. Improving your credit may enable you to obtain a better loan. There are two free or inexpensive credit counseling agencies in the area that can help you improve your credit.

If you have never used a credit card or borrowed money, you may not have a credit history. This section will also provide you with information on establishing a credit history and sources of nontraditional credit.

What is Credit?
If you have taken out a loan or used a credit card, you were given credit. Credit is the act of using someone else’s money to pay for things. You promise to repay the loan to the person or company that loaned you the money. Your loan or credit card payment includes the principal (the money borrowed) and interest (money paid for the privilege of borrowing the money).

If you make payments on time and repay all your debts, you probably have good credit. It is important to have good credit when you are trying to get a loan for a major purchase, such as a home.

Lenders gather information about your credit in order to make a decision about lending you money.