I get asked this ALL THE TIME. People want to buy a home but don't know where to start as far as credit. There are a lot of people that have incorrect information. Because of that, I have put together a quick credit guide that is quick, easy, and to the point.
* Make all of your debt payments on time.
* Pay off any collections, judgments, or liens.
*Make sure the info on your credit report is accurate. There have been many loans denied because of something being incorrect on the credit report.
*Dispute any errors with the credit bureau (Equifax, Experion, & Transunion). Call and write them every week until it is removed. You don't want this problem while under contract. It is not a fast process. Stay on it!
*Keep your credit account balances low. I would say under 40%. You don't want to show your have maxed out cards.
*Keep any accounts you have had for a long time. Even if it is a zero balance. Having an account for a long time looks good.
*Show that you have different types of credit lines. Not just all credit cards. Example: Car note and student loans, and if possible a line of credit with your bank.
*Do not have or allow your credit pulled multiple times. Each time it's pulled it lowers your score.
*If you have a family member with good credit and pays everything on time, ask if you can be added to their account.
*DO NOT make any big purchases or changes to your credit before talking to your lender. In other words, just because your credit is getting better don't buy a new car without asking.
*Pay student loans on time every month. Student loans is one of the biggest problems that can hold you back from approving for a loan.
*DO NOT COSIGN OR GET SOMETHING IN YOUR NAME FOR ANYONE! I don't care who or what it is. Cosigning is out! I come across so many people that always say "well my sister, mom, etc, had this in my name/or I consigned and they didn't pay." It doesn't matter. It is still on you. At the end of the day, YOU are the only person who will truly protect your credit score.