Improve your credit

Credit scores, along with your overall income and debt, are a big factor in determining if you'll qualify for a loan and what interest rate you will receive.

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.
2. Pay down credit card bills. If possible, pay off entire balance every month. However, transferring credit card debt from one card to another could lower your score.
3. Don't charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for mortgage. You're penalized less for problems after a year.
5. Don't purchase big-ticket items for you new home on credit cards until after the loan is approved. The amounts will add to your debt.
6. Don't open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a free copy of the complete publication, "Knowing and Understanding Your Credit," go to the "Contact" tab, select the form "Request Buyers Guide" and complete the information.

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