A FICO Credit Score is a formula that translates personal information to a credit report. FICO credit score is comprised of a a three digit score ranging from 300 to 900. Your credit score reflects creditworthiness. The higher your credit score, the lower the probability that you will become delinquent on credit lines extended to you. Lenders use your credit score to determine if you are a good candidate for credit and likely to pay your bills.

FICO Credit Score Variables:

1) Payment History - Indicates whether you make your payments on time

2) Money Owed - How much you owe in relation to your credit limits and length of credit accounts.

3) New Credit - Are you looking for new credit and handling of newly opened credit lines.

4) Type of credit - Weighs your loans you have - car loan, line of credit, credit card balance.

To improve your credit score you need to pay all of your bills on time. Paying late, or having your account sent to a collection agency has a negative impact on your credit score. Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit may also help your score.

The Federal Reserve Bank controls an sets benchmark federal funds interest rates.

Interest Rates go "Up and Down". Sample effects of an interest rate increase.

An interest rate increase from 6 percent to 7 percent on a 30-year loan adds about 10 percent to a monthly mortgage bill. A homeowner who financed a loan of $200,000 at 6 percent would pay about $1,200 a month. At 7 percent, the bill would come to $1,330.

Get pre-approved for your home mortgage

It's become more important than ever to get pre-approved. Remember that other buyers have gotten pre-approved. Pre-approval shows your willingness to buy, and that you are ready.

The pre-approval allows you to handle the home buying process with ease. Remember the inspector, attorney and all the paperwork required. It's easier with a loan in place.

Pre-approvals involve filling out a mortgage application before you begin to shop. It includes all your financial information such as salary, credit history and bank statements, and it establishes a target loan amount. Approvals take several days.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

How do I order my free report?

You can order your free annual credit by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

When you order, you need to provide your name, address, Social Security number, and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.

Warning About "Imposter" Web Sites

The FTC advises consumers who order their free annual credit reports online to be sure to correctly spell annualcreditreport.com, or link to it from the FTC's website to avoid being misdirected to other websites that offer supposedly free reports, but only with the purchase of other products. While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports.