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People sometimes are not aware just how important those 3 digit numbers are your credit score. From buying a home to buying an engagement ring, those numbers can make a significant impact on your life.

A credit score is a number that lenders, creditors and even Realtors use to estimate a persons risk or credibility. Experience has shown many lenders that borrowers with higher credit scores are less likely to default on a loan. Borrowers that have a lowers score or less than perfect credit, may not have a great sense of financial responsibility.

Your credit score is also sometimes known and referred to as a FICO score, this stands for Fair Isaac Corporation. This is the creator of that particular software. No matter what a lender is calling your score, the numbers all mean the same thing - Good or bad.

If you are looking to buy a home, the credit score will play a major factor in determining the interest rate that a lender may offer you. It is important to look into what your score is saying about you prior to buying a home. A lender will look at the score and determine if he or she feels that you may be a high risk borrower or not.

Your Payment History Includes can date back 10 years and include past purchases, loans, even bills. The payment history on your credit score will include:

* Number of accounts paid as agreed

* Negative public records or collections

* Delinquent accounts or defaulted loans

Credit scores and FICA scores range from 340 to 850. The higher your score, the better off you are.

Borrowers with a credit score over 700 are typically offered better deals and accepted more quickly for home loans.

According to Ingrid Mercado, a Realtor in Torrance, California there are a few tips in getting started with a home loan. She suggests learning the local market, many Realtors will offer you "comps" on recently sold homes in your area. Take a little extra time to look over all the information on these homes, especially the asking price, what they sold for, and the price per square foot. With this information in hand, you can submit a more competitive first offer and come across as a serious buyer.

Elaine Roberts is another experienced Realtor in Huntington Beach that I spoke with regarding credit scores and first time home buyers. She had a great quote, "Erin, make sure you keep the balance on your credit cards under a quarter of the total line of credit available to you and stay away from any large purchases or bank transfers before attempting to buy your home". Elaine mentioned that those sort of transactions may appear suspicious to a lender.

Do not spend sleepless nights worrying if your credit is less than perfect though, even if you have terrible credit, there will always be a loan option out there for you.

1. "Dream Fund" This is a fund that you set aside solely for the purchase of a new home, hence the term "dream fund". It could be a simple as $50.00 a week put away until you are ready to buy.

3. Start early cleaning up your credit, one creditor at a time. Before you know it, you will be debt free. Most creditors want you off their list too and are ready to make a deal.

Learn more about this author, Erinn Soule.
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