Improving your credit rating so that it is above 700 at the minimum will improve your ability to get a mortgage, and will also ensure that you get better terms for the loan. There are many things that you can do to improve your credit score. This article only discusses five of the ways to improve your credit rating.

The first thing you could do is to obtain a copy of your credit report from all three of the credit reporting agencies (Experian, Equifax, and Trans Union) long before ever applying for a mortgage loan. By law, each CRA has to give you a free copy of your credit report once a year if you ask for it. Look through your report and make sure that it does not have any erroneous entries. Sometimes similar names can get mixed up, such as John S. Smith's credit information getting put onto the credit report of his son, John S. Smith Jr. Other times there is really no concrete explanation for an error; it just simply happens. You should also obtain your FICO score, which is a three digit number that rates your credit worthiness and is used in more than 70% of mortgage-lending decisions. Obtaining your credit history and score at least six months before applying for a mortgage will give you enough time to challenge any erroneous entries, and also to work on improving the legitimate entries, like paying down your debt.

The next thing you need to consider doing is paying any outstanding debt. The most critical debt is the higher interest one, like your credit card debt. Prepare an aggressive plan on drastically reducing this debt and actually work on it! If you may have lapsed in your payment of a particular debt and you therefore have a delinquent account, pay it off, as this is much better than having an unpaid debt in your credit report.

When you start on working on reducing your debt, also make sure that you avoid making any late payments; pay every bill you owe on a timely basis. This will look good on your report, as the lenders will see that you are creditworthy and can pay your bills when and how you say you will.

As you work on improving your credit score, don't go out and apply for new credit cards or a car loan or any other kind of new credit! The older the credit accounts you have, the higher your score is likely to be. So getting new credit accounts when trying to fix your credit will be counter-productive. However, if you don't have much credit history (e.g. you don't have a credit card or anything that can be used to show your creditworthiness) you can obtain a credit card. If you do this, don't then go out on a spending spree! Use the card prudently, and make sure that you pay off all the balance on a monthly rate.

Finally, by law, negative items on your credit report must be deleted after seven years, or ten years for bankruptcy. Therefore, if you find a negative item in your report that is about to expire, wait until it does before you apply for a mortgage. Also check to make sure that there are no negative items in your report that are more than seven years old; have them removed from your report.

If you obtain your credit reports way before you ever consider applying for a mortgage, you will then have enough time to work on improving your credit rating. Once you feel that your credit history is better, apply for your credit report again to make sure that any erroneous items have actually been removed, and that the entries there are now correct. At this point, you are now ready to apply for a mortgage.