Recently, a college graduate who got plenty of cash for graduation decided to use the money to purchase a home.

While the graduation gifts were good money for downpayment or, perhaps, new furnishings, the young home buyer still needed a loan to purchase the home.

She was surprised to learn that because she had not established or used any credit, she would have to spend six months establishing a credit score and history.

Credit reports are the vehicle that mortgage companies use to evaluate a borrower.  The higher the credit score, the better the loan terms, but any mortgage applicant must at least have a score to be considered for a loan.

With all of the hype about college students abusing credit cards, here is one example of the extreme case where no credit was used and it prevents the prospective buyer from purchasing her first home now.

Unfortunately, the low interest rates may not be available and the prospective purchaser may pay more later because of the lack of a credit score.  No credit   history means no mortgage until credit is used for at least six months in order to establish some history.

So, if a home purchase is in the future plans, establish credit so that a mortgage can be obtained when needed.

 Important tips to remember:

•  Establish credit with two or more entities
• Pay off the balance, where possible, when the bill comes to establish an excellent rating
• It is not necessary to purchase big ticket items
• Pay on time for all purchases are made

For more nformation on this topic or for answers to real estate questions,contact ShirleySimmons, Prudential Georgia Realty. www.shirleysimmons.com.