If you have a poor credit rating, and nearly half of Americans do, the first thing you need to do before thinking about a mortgage is tune up your credit. You need to request credit reports from each of the three credit reporting agencies. The credit agencies are Equifax, Trans Union, and Experian. Dont pay for your credit reports; recent legislation requires each of them to provide one free copy of your credit reports every year. You can access these free reports at the website AnnualCreditReport.com.

Once you have your three credit reports carefully examine them for errors. If you find errors you will need to dispute the errors with the corresponding credit reporting agency. The credit reporting agencies (Equifax, Trans Union, and Experian) all have websites with detailed procedures for disputing errors. Once you have verified your credit reports are accurate or disputed any errors you need to focus on your bills.

Before applying for a mortgage you should try and have at least six months of on time payments on your credit report. That means paying all of your bills on time. Mortgage lenders look at your repayment history when determining how much of a risk you are for lending money. The fewer late payments you have on your record, the better.

Next, work to lower your debt-to-income ratio. There are two ways to accomplish this. One way is to increase your income by getting a higher paying or even a second job. The next way is to reduce your debt. Paying down the balances on your credit cards and closing the accounts of cards you do not use will do wonders for raising your credit score.

This credit score make-over will take you about six months to complete. You need to allow this long for the credit agencies to correct any errors and to build up a solid record of on-time payments. Once you have done this you are ready to start shopping for a mortgage loan.