Unless you plan on paying cash for your home, your credit score is the most influential factor on not only how much you can borrow, but how low of an interest rate you can secure. Now is the best time to get a copy of your credit report, so there are no surprises when you meet with your mortgage professional to discuss the best possibly funding for your mortgage. The thing to remember about your credit history is that there are often mistakes listed, and, unless you are proactive about resolving them, they will not go away.

One of the best websites for understanding and improving your credit is Creditinfocenter.

What is a credit score and how is it calculated?

Credit bureau scoring is a statistical means of assessing how likely a borrower is to pay back a loan. A credit bureau score is based on the data available in the borrower's income, assets, or bank account, although those and other factors are still considered by lenders and investors, independent of the score.

Fair Isaac Credit Bureau scores range from approximately 375 to 900 points and are available through the three national credit data repositories-Equifax, TransUnion and Experian. The scores are often referred to as FICO scores.

Based on actual credit data on millions of consumers and extensive research into credit performance, the FICO score attempts to predict the likelihood that a consumer will make loan payments as agreed. The score is based on all the credit-related data, not just negative data such as missed mortgage payments or bankruptcies.

The types of credit information used in the credit bureau scorecards are typically the same items an underwriter would use to make a credit decision. These could include the payment history, outstanding debt, credit history, pursuit of new credit and types of credit in use.

How can I get information about my credit history?

Obtaining your credit report is as easy as calling one of the three major reporting companies (Equifax, Experian, and Trans Union) and requesting one. Once you receive the report, it's important to verify its accuracy. Double-check the high credit limit, total loan, and past due columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports, but some states permit citizens to acquire a free one. Here are the numbers for the reporting companies:

Equifax: (800) 685-1111; Experian (TRW): (800) 422-4879; and Transunion: (316) 634-8440

How can I improve or repair my score?

There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

Many people think that being debt-free is a positive trait valued by lenders. Nothing could be further from the truth. A borrower with no credit is almost as bad as one with bad credit. A creditor wants to see a history of how you handle debts. Building or re-building a credit report is not a quick-fix situation.

The basic strategy to repairing your credit is as follows:

1. Get and review your credit report.
2. Analyze your report.
3. Make a list of all items you consider to be questionable or negative. Clearly identify each item in your report that you dispute, explain why you dispute the information.
4. Write a dispute letter to the bureaus.
5. Send the letter to the credit bureaus. Make sure you send it registered or certified mail.
6. Document your efforts. Record when you sent your letters, and the results.
7. Wait for the bureaus to investigate your claims.
8. Analyze the results.
9. Was the item deleted or changed to your satisfaction? You may continue steps 1, 2 and 3 above until you feel the dispute is settled satisfactorily. Remember, there is no charge for a reinvestigation. If you don't get the results you want, dispute the listing again.

Doesn't using the score mean fewer people will get mortgage loans?

No, in fact, the opposite may be true. Credit scoring is just one of several ways that lenders and the secondary market decide whether to lend someone money and under what terms. The lender uses the scores to determine if the borrower exceeds the acceptable level of risk for the product offered. If the score on a borrower's credit report is too low, that doesn't mean it is too low for other products.