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Unless you pay cash for your house-an unlikely situation except for those on the Forbes' list of 400 Richest Americans-you're going to need a mortgage. And to get a mortgage you're going to need a decent credit history. So, before applying for that loan, you'll want to do everything possible to get a "yes." And that involves knowing what's inside your credit report.  Also, read Zombie debt collectors dig up your old mistakes to find out how debt collectors are making it more and more important to keep an eye on your credit.

Perhaps you think you have an unblemished credit record-and maybe you do-but you might be surprised. Even the tiniest infraction can mess things up. Or, perhaps deep down you know you've been a little sloppy in this area-fallen behind on credit card payments, shifting balances from one card to another, or you missed a car loan payment.

Know the Score

Every parent knows their child's soccer team score blindfolded. Grandparents automatically recite grandchildrens' SAT scores. You probably even know your bowling league score for the past 12 months. But it's rare that one knows their FICO score.

The FICO score is a good place to begin your journey of cleaning up a bad credit history.

FICO stands for Fair, Issac & Co. They're the folks who created the mathematical formula used to calculate what's now commonly called the FICO score. This three-digit number, which appears on your credit report, is a big, big determinant in whether or not you get a mortgage or any other type of loan. FICO helps banks, credit card issuers, auto loan companies and other lenders decide if you're a good credit risk. It can also make a difference in the interest rate you're offered. Obviously, the higher your score, the more likely you'll land a mortgage and one with a low rate.  To give you an idea of how much your FICO Score can affect your interest rate:

Your FICO Score---------------Interest Rate
720 - 850 ----------------------- 6.089%
700 - 719 ----------------------- 6.214%
675 - 699 ----------------------- 6.751%
620 - 674 ----------------------- 7.901%
560 - 619 ----------------------- 8.531%
500 - 559 ----------------------- 9.289%

Among the things that affect your FICO score:

• Delinquent payments
• Opening too many accounts during a 12-month period
• Carrying the maximum balance (or nearly so) on revolving credit cards
• Tax liens, judgments and bankruptcies
• Too many credit inquiries

Get your FICO Score and your Credit Report

Until recently, one's FICO score was a deep, dark secret, known only to the credit bureaus and lenders. Starting a couple of years ago, however, FICO scores became public-in fact you can get yours (along with your credit report) from the three major credit bureaus or directly from FICO.

The three credit bureaus charge a modest fee, typically $9-$12, for sending out reports. Spend the money and get copies from all three-each may have different data. Order your report three to six months before applying for a mortgage-you want plenty of time to correct any errors and avoid being turned down for mortgage. Being turned down also goes into your report-it's a Catch-22.

The three major credit bureaus are:

1. Equifax: 800-685-1111
2. Experian: 888-397-3742
3. TransUnion: 800-888-4213

(these links will take you to the credit reporting agencies websites)

Getting a Free Copy of your Report

There are three ways you can get a free copy of your credit report:

1. If you've been turned down for credit. The lender who said "no" is required by law to tell you which bureau provided this information. The bureau, in turn, must give you a free copy of your report-but only for 60 days.
2. You can get one free credit report a year from each of the three credit reporting agencies.
3. You can also get a free report if you are unemployed or on public welfare or you believe your file contains bad information as a result of fraud.

What's Inside your Report

You'll find your credit report includes extremely detailed information on whether you pay your bills on time, what credit you have applied for, who has given you credit, who has turned you down. Your history of repaying bank loans, utility bills and the government will also be there.

Your credit report lists the following information for each of your credit accounts:

• Date opened
• Original loan amount or credit limit and interest rate
• Scheduled monthly payment amount
• Date last payment was made
• Balance owed
• Amount past due
• Payment history for the last 24 months

Credit inquiries from companies that have checked on your credit are also listed-these give potential lenders an idea of how much credit you have sought, successfully and unsuccessfully.Credit inquiries from companies that have checked on your credit are also listed-these give potential lenders an idea of how much credit you have sought, successfully and unsuccessfully.

Make sure the following basic facts are correct; mistakes can simply be the result of spelling errors, typos, outdated information, or name confusion.

• Your name-if you've married or divorced and changed your name, the correct name should be recorded; if accounts you never held jointly with an ex-spouse appear on your report, request that this information be removed
• Your date of birth
• Your Social Security number
• Current and previous addresses
• Current and previous employers
• Current accounts
• Accounts that have been closed

Also check to make certain no items are in your report longer than the law allows. If you declared bankruptcy, that fact must be removed from your credit history after 10 years. Information pertaining to arrests, tax liens, suits and judgments must be removed after 7 years. Minor infractions, like a missed payment or a payment over 30 days late, stay on your report for seven years.

Correcting Mistakes

If you find errors in your credit report, contact the credit bureau that issued the report in writing. The bureau cannot ignore you-the Fair Credit Reporting Act requires credit bureaus to look into all disputed items within 30 days unless it considers your dispute "frivolous." More specifically, the credit bureau must investigate any errors you raise with the bank, credit card company or organization that supplied the data to the bureau.

If the creditor agrees that you are correct, the bank or credit card company must notify all nationwide credit bureaus so the information in your file can be corrected. You can also request that the credit bureau send notices of all corrections to anyone who received your report during the last six months.

If you do not agree with the results, you can file a 100-word written statement, giving your opinion. This statement must be included each time your report is requested in the future.

You'll find sample letters and other important details spelled out very clearly on the FTC's website. Take time to read this information. It will help you file a strong case.

10 Ways to Clean up your Act

You'll also need to do some additional damage control and begin to rebuild your credit history. It won't be easy and it will take willpower, but if you're determined to get a mortgage and buy your dream house, you can do it.

1. Pay your bills on time. Make at least the minimum payment. You'll avoid late fees and at the same time repair your credit health-a new pattern of prompt payments will eventually overtake your previous negative pattern.
2. Contact your creditors. Do so immediately if you cannot make a payment on time. Negotiate a new payment schedule.
3. Reduce the number of credit cards. Close unused accounts. Mortgage lenders look at your credit lines as a potential for going on a credit card spending spree. The more cards in your pocket, the larger your potential for disaster.
4. Pay off the total balance on existing accounts. This will end having to make high monthly payments and free up money to save for a down payment. If you missed a payment to a creditor a while back, but now you're up to date, you can try asking them to remove this negative information from your credit report.
5. Pay off your highest rate cards first. This way you'll save the most amount of money and get out of debt more quickly.
6. Track your debts. Non-mortgage debt payments should never be more than 10% to 15% of your monthly take-home pay.
7. Keep inquiries to a minimum. Each time you authorize a lender, creditor or other business to check your credit report, an inquiry is added to your file. A large number of inquiries within a short time period may send up a red flag-that you're applying for too much credit because you're having financial problems or you're taking on more debt that you can pay off. Note: If multiple queries have been for one type of credit-say, a car loan-those queries will be grouped as one.
8. Switch to a secured credit card. If you cannot get credit or you cannot stick to a prompt payment plan, get a secured card. Because it is linked to your bank savings account, you can withdraw only up to the amount in that account.
9. Put off buying big ticket items. The new refrigerator or sofa can wait until you've cleaned up your credit.
10. Pay for everyday items with cash. Don't pay for your groceries with your credit card. It's much too easy to spend more than you have budgeted for...and you could wind up paying interest on your quarter of milk and loaf of bread.