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The Importance of Good Credit

About Freddie Mac

Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing. Freddie Mac purchases mortgages from lenders and packages them into securities that are sold to investors. Since its creation, Freddie Mac has helped finance one in six American homes.

About CreditSmart? Asian

CreditSmart Asian is a multilingual series to guide Asian American consumers on how to build and maintain better credit, understand the steps to buying a home and how to protect their investment.

Special Thanks

Special thanks to the following organizations for their collaboration in the development of the CreditSmart Asian: Asian Americans for Equality, Boat People SOS, Chhaya CDC, Filipinos for Affirmative Action, Korean Churches for Community Development, Nakatomi & Associates, National Coalition for Asian Pacific American Community Development (National CAPACD), National Congress of Vietnamese Americans, National Korean American Service & Education Consortium, Inc., and Quon Design.

Freddie Mac: The Importance of Good Credit

I Open bank accounts I Apply for a credit card I Keep records of repayment and income I Use credit card responsibly over time I Make payments before due date I File income taxes I Know your rights as a borrower I Build your good credit rating

CreditSmart Asian: The Importance of Good Credit

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Table of Contents

Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Good Credit: A Gift for the Future . . . . . . . . . . . . . . . . . . . . . . . . . 4 Good Credit is Worth It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Building Good Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Keeping Credit Strong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 You Have Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Being Credit Wise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Good Credit: An Asset for Your Future . . . . . . . . . . . . . . . . . . . . . 26

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CreditSmart Asian: The Importance of Good Credit

Credit Smart? Asian: The Importance of Good Credit

Welcome,

F or millions of families, homeownership is a route to creating wealth. It builds financial security for the future.

As you begin the journey to homeownership, Freddie Mac is providing this information to help you successfully make your way through the process. We know the process may seem daunting, especially if you have limited English skills or if you don't yet have credit established and don't know how the system works. We created this series of guidebooks to help you get started. The guidebooks cover the importance of establishing your credit, the process of buying a home, including how to make the best financial choices for you and your family, and the responsibilities of being a homeowner.

There are many other resources available to you, including community organizations, your local government housing agencies, real estate agents and lenders who understand and are willing to work with prospective homebuyers like you. We strongly encourage you to seek out their professional services to gather the facts so you can make the best decisions. You will face many choices throughout the process.

Positive credit is an asset that will fuel your future wealth.

In this first guidebook, The Importance of Good Credit, you will learn the significance of establishing and maintaining a good credit history. Even if you don't have a checking account or a credit card, you will learn how and where to begin. Yes, it takes time, but establishing your good credit history is worth it. Good credit is an asset that will fuel your future wealth by allowing you to secure a loan for a car or for your business and to buy a home where your family can live and grow together.

After reading this booklet, you should read our companion guidebooks, Steps to Homeownership and Homeowner Benefits and Responsibilities. Together, these books are a valuable road map addressing the issues and questions most important to you.

From all of us at Freddie Mac, we wish you great success. With proper planning, time and hard work, you can realize your dream of homeownership.

CreditSmart Asian: The Importance of Good Credit

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