Their first offering is titled "Knowing And Understanding Your Credit," and it is easy to read and informative.

Because credit is so important to the process of homeownership, the booklet begins with a basic introduction to credit, explaining that the word credit means using someone else’s money to pay for things. Credit also means making a promise to pay that money back.

One of the features I like about the booklet is that readers are encouraged to understand how credit reporting works and how they can work to improve their credit standing. I have long felt that these topics are so important they should be taught in our schools, though they rarely are covered.

The Fannie Mae booklet makes the point that you don’t need perfect credit to buy a house, and that if you have made some credit mistakes in the past, you can work now to develop good credit habits like paying bills on time and not taking out credit that you will be unable to repay.

I am also impressed at the depth of the information offered. For example, in a section of the material on credit reports, the reader is informed that credit reports do not contain information about your race, religion, medical history, personal lifestyle, political preferences, criminal record, or any other information unrelated to credit. I would bet that the vast majority of home buyers might assume otherwise.

It also informs us that credit reports contain four types of information:

* Identifying information: your name, current and previous addresses, phone number, social security number, date of birth, and current and previous employers.

* Credit information: specific details about your credit cards, student loans and other loans. This information contains the date opened, credit limit or loan amount, current balance and monthly payment. The report also shows how many times, if any, you were late in making payments over the past several years. Late payments and accounts turned over for collection show up in this section.

* Public records: bankruptcy records, foreclosures, tax liens, and monetary court judgements if you have ever been sued are listed in this section. This information is collected from public records.

* Inquiries: shows the names of those businesses who have asked for credit information about you and also shows how often you have applied for credit in the past two years.

My sense is that if a first time buyer understood just this much about credit reports, he might be better able to grasp the importance of using credit wisely in the months before applying for a home loan.

The booklet goes on to explain that it is best to order a free copy of one’s credit history before applying for a loan, just to make sure there are no errors. Equifax can be reached at 800-685-1111, Experian is at 888-397-3742, and TransUnion is at 800-916-8800. Georgia residents get two free reports per calendar year.

Next, the Fannie Mae booklet explores the all-important topic of credit scoring, stating that credit scores are the result of a computer analysis of all the information in your credit report. Since the three reporting agencies likely have different information in their files, you will most likely have three different credit scores.

Since many first time buyers fall into the trap of having a low credit score, Fannie Mae spends several pages suggesting steps you can take to improve your credit score over time. In addition to the obvious suggestion of paying your monthly bills on time, the booklet suggests:

* Pay bills first, before you spend money for things like going out to dinner or to the movies.

* Pay off credit cards each month, and if you can’t pay them off, cut them up so you can’t use them. For many folks with poor credit habits, this is a tough pill to swallow, but one that they truly need.

* Charge less than the maximum amount allowed on credit cards. Even if you make the monthly payments on time, charging the maximum can make it appear that you are in too much debt and that you are relying too heavily on credit.

* Avoid making too many credit applications. It’s usually not worth the free gift if it hurts your credit score, and it does.

* Try to exceed the minimum due each month on installment or revolving loans, to minimize the bite of high interest rates.

While this advice may seem basic, it is important information to those who may be attempting to enter the ranks of home ownership for the first time.

Next week: Opening the Door to a Home of Your Own.