By Jeanette Joy Fisher

Since mortgage lenders are businesspeople, first and foremost, they need to determine ahead of time if you're creditworthy before approving a home loan. To do that, they need to examine your past credit history and look at your current financial status to minimize their risk when offering what's generally the most expensive purchase a person will make during their lifetime. One of the tools they use to make that decision is your credit score, and if it's not where you'd like it to be, there are some things you can do to increase your score.

Contrary to what you may have seen in magazines, in your email box, and on late-night television, there really are no quick fixes that will instantly repair your credit. It will take time and an ongoing effort from you to do that.

When computing a credit score, mortgage lenders examine five sections of your credit report. They look at your past payment history, the amount you currently owe, how long you've had credit, the types of credit you've received, and any new credit for which you've applied. Here are some suggestions for improving your credit score if there are one or two weak areas in your report.

First, try to keep your debt load to a minimum. A high debt-to-income ratio will drive your credit score down. If you have debt, pay it off rather than shifting it from credit card to credit card. However, if you have one card with a lot of available credit and another card nearing the limit, shifting part of the balance makes sense. You don't want any credit cards with a balance near the credit limit. Any maxed-out credit line lowers your score dramatically.

Next, stop making late payments. Some people are lackadaisical about paying bills, but if you have bills that are past due, get them paid up and keep them current from now on. If you have bills that you know you're going to have trouble paying, contact that creditor right away and work out a payment plan that will help keep the negative information off your credit report. If you have past due remarks on your credit report, contact the lender and ask for them to remove the negative report since you are now current.

There's not much you can do about the length of your credit history. All you can do is to make sure that your history from this moment on will be perfect. Time is time, and there's no way of changing it or speeding it up.

If you decide to open a new charge account, do it sparingly. Don't open a number of new accounts in the hope of raising your score. In most cases, new credit won't raise your score, and may actually do more harm than good. If you've had payment problems in the past but are now more stable, it will help to open a few new accounts, but if you get one, pay it off on time and don't max it out.

If you can, try for a mixture of different types of loans, such as installment loans (car loans, for instance) and credit card debt. Loans with fixed payments can help raise your score if you live up to your part of the bargain as agreed, but you don't want too many of those kinds of loans, because the fixed payments will lower your debt-to-income ratio.

There are ways to improve your chances of obtaining a home loan, even if your previous history has been less than stellar. However, there's no quick way out. It will take time and concerted effort to raise your credit score enough to be considered a good risk by your lender.

Copyright © 2006 Jeanette J. Fisher

Besides your credit score, mortgage lenders review five other qualifications. FREE ebook on credit, "Six Credit Tips for Mortgage Financing" at http://www.worryfreecredit.com

Jeanette Fisher teaches home buyers six steps to build credit for home loans. She is the author of real estate investing books including Credit Help! Get the Credit You Need to Buy Real Estate available on Amazon.

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