Since a good credit rating is essential when applying for a mortgage loan, prospective home buyers should keep a close eye on their credit score in the months leading up to a home purchase. Poor credit can reduce your chances of securing an attractive mortgage interest rate or even take you out of the running for home financing.

So, what should you do if your credit isn’t where it should be?

General Tips for Maintaining Good Credit:

• Keep an eye on the score even if you aren’t in the market for a new home. You should be doing this as a matter of course since your credit can affect your ability to qualify for other loans and purchases, lease an apartment, and even land a job. By keeping an eye out for any negative changes in your credit, when the time comes to buy a home, your credit will already be in good shape to land you a loan at an attractive interest rate.

• Make certain you are aware of the status of any loans or credit cards you have applied for. If you don’t hear back from a company you’ve applied with, don’t assume you have been declined. It’s possible that you were approved but a clerical error has resulted in a breakdown in communication. You want to stay on top of the status of all of your accounts.

• You’ll also want to keep a record of any communication between you and your lenders regarding the account or loan, particularly if any terms have been changed. This backup could prove vital should you ever need to dispute a credit concern.

• Don’t apply for too many forms of credit all at once. Your credit score could suffer if you look as though you need multiple credit cards, for example.

• Check out your free credit report annually. Your report will contain your credit rating from each of the three credit bureaus – Experian, TransUnion, and Equifax. If you find any discrepancies among the bureaus or any errors, investigate them and if necessary, dispute anything you feel is erroneously affecting your credit.

Strategies for Repairing Poor Credit:

• If you should find that your credit score is lower than you would like, there are a few things you can do to shore up that number, starting with making an effort to pay off your debts. You should make timely payments and keep any credit card balances low; strive to pay off balances monthly.

• Dispute any credit blemishes that you believe are in error. In this era of computerization of records, clerical errors do occur and are usually repairable.

• If necessary, investigate legal avenues to address inaccuracies in your credit report. Look at the success ratios and costs associated with any companies that specialize in credit repair. Avoid scams making promises of instant credit repair that will just waste time and produce no results. Credit repair companies simply take the reins from you in investigating disputed credit matters – which is something you can do for yourself if you’re willing to invest the time. There is no “magic wand” that can wave away legitimately poor credit.

• If you are overwhelmed by your bills, consider contacting a credit counselor. While a counselor cannot repair your credit, he or she can provide you with strategies for creating and maintaining a budget and managing your financial situation.

• Be patient. Credit is built over time, which is why consumers with longer, healthy credit histories have higher credit scores. If your credit score is low because you don’t have a long credit history, you can start to build credit by applying for a credit card, using it wisely, and paying off the balance monthly to show that you can make regular payments. Your credit score will eventually climb.

Even if you have had poor credit in the past, there is always room for improvement. By keeping a close eye on your financial situation, making wise choices about managing your money, and being patient while your credit score climbs to a favorable number, you’ll be on your way to obtaining a favorable interest rate on a home loan.