You and your credit

Credit allows you to buy items now even if you do not have the cash up front. Taking care of your credit can reap benefits when buying a home. If you have a higher credit score it is sometimes easier to take advantage of the multitude of loan programs available.

There are three basic types of credit:

• Installment credit, this includes auto loans, requires you to sign a contract to repay a fixed amount of money in payments over a certain period of time.
• Revolving credit, such as a credit card or other credit card (Visa®, Mastercard®), gives you the option of paying back money borrowed in full each month, making a minimum payment, or paying an amount somewhere in between. As you pay the money back, the amount repaid generally becomes available to borrow again.
• Open accounts require that loans borrowed be repaid in full each month. Some travel and entertainment cards, such as certain American Express® credit cards, are open accounts.

Getting a copy of your credit and talking to a mortgage counselor are important first steps in assessing your home buying options.