Are you thinking about buying a home soon?
The following list will help you organize your financial life prior to applying for a mortgage loan. Improving your credit score just a little bit can save you a ton of money over the life of your loan, so it pays to take a long, hard look at your credit report.
Work on paying down your credit card balances Credit utilization is one of the biggest factors in determining your credit score. Your credit utilization should at least be less than 30 percent of your limit, however reducing it to 15 percent or below is even better. This rule applies to both individual cards and your overall credit limit. You may consider using some of your down payment cash to pay off your credit card debt.
Refrain from opening any new lines of credit Avoid opening new lines of credit if you're applying for a mortgage in the very near future. This will cause a hard inquiry to show up on your credit report.
Take care of negative items It's good practice to check your credit report for negative items a few times a year-you can get one free report from each of the three major bureaus (Experian, Equifax, and TransUnion) per year.
Write a letter to your original creditor explaining what happened with any negative reports kindly explaining the circumstances that led to the situation, and request that the negative item be removed from your report. You may be pleasantly surprised at the response, and removing a negative item will improve your credit score in a hurry. You can find some good templates for a request letter online.