Your mortgage is arguably the most important loan you will ever apply for. Your mortgage application can make a major difference not only in whether you’re able to buy a house period, but how much house you can afford. To qualify for a mortgage and get the best interest rate possible, you’re going to want to clean up your credit report. Here are three steps to take to fix your credit report and boost your score before applying for a mortgage.

  • Don’t apply for any new loans or credit cards. This may seem like a no-brainer, but many people don’t realize just how deep of a look the bank takes at their finances before approving a loan. If you’ve recently opened up several new credit cards, it might look like you’re shopping around for credit to cover your living expenses and therefore, can’t afford a mortgage. Or, maybe you just applied for a loan to buy a car. The bank might doubt whether you’re prepared to manage both a new car payment and a home loan. It’s best to hold off on making any major purchases or opening any new accounts until after you’ve been approved for a mortgage.
  • Get the balances on your credit cards beneath 15%. This means if you have a credit card with a $1,000 limit, the balance should be $150 or less. If you have one card with a high balance and others with low balances, you may be able to meet the 15% rule by moving some money around. For example, if you have two cards with $1,000 limits, the first might have a balance of $300 while the other has no balance. If you move $150 to the other card, you’ll have a 15% balance on both. This looks better than having one card with a 30% balance.
  • Ask forgiveness for negative items on your credit report. First, you’re going to want to pull your credit report from one of the three major bureaus: Experian, Transunion or Equifax. Then, go over it with a magnifying glass to spot any imperfections. If you have a late payment, for example, write a goodwill adjustment letter to that creditor asking them to remove the black mark from their records. Explain that you’re applying for a mortgage, and are working to clean up your credit report. This technique can take a month or two to be reflected on your credit report, so make sure you get started ahead of time.

By following these three steps, you’ll be well on your way to getting your credit score as high as possible and in turn, getting a better deal on your home loan.