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Part 2: Understanding Your Credit Rating

JENKINTOWN, Pa. (CBS) - Buying your first home can be a very exciting time, but it can also cause a lot of anxiety -- especially when it comes to the application process for securing a mortgage.

Credit standards have been raised over the last couple of years, so that means first-time homebuyers need to be proactive when it comes to making sure their credit is in good shape.

But many have no idea what their credit score is, or in some cases what's included on their credit report.

lee mike side segall
(Photo by Brad Segall)

Mike Lee (right) is a mortgage consultant for Trident Mortgage Company in Jenkintown, Pa., and a big part of his job, he says, is explaining that report to his clients.

"It can be a scary thing and when you actually see what their credit score is and what's on the credit report," he says.  "So it's a function of coming up with a game plan if the credit score is less than perfect as to how to get that credit score where it needs to be."

Lee says there are three steps people should take:

-- stay current with monthly payments,
-- manage credit balances, and
-- manage collections and judgments.

And if your credit is not up to par, he adds, there is still hope.

"There are programs out there for folks who have less-than-perfect credit, and those programs are great for first-time homebuyers and great for folks who need a program that caters to those with less-than-perfect credit.  Still, low down payments are available, and those programs do come along with low interest rates."

Knowing what's on the report, he points out, can make the process as smooth as possible.

Reported by Brad Segall, KYW Newsradio 1060

Listen to the KYW Regional Affairs Council series, "Buying Your First Home"...

Part 1: The Excitement of a First-Time Home Purchase, by KYW's Brad Segall:


Part 2: Understanding Your Credit Rating, by KYW's Brad Segall:


Part 3: Can You Afford Your Own Home?, by KYW's Michelle Durham:


Part 4: The Changing Real Estate Market, by KYW's Michelle Durham:


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