Improve and Get Approved

The Big Picture
Before you can repair credit, you have to understand exactly what you're repairing. For most people, this means fixing a spotty payment history and a high debt-to-credit-limit ratio. These two factors comprise 65 percent of your FICO score, with payment history being a slightly more important factor.
Credit Report Review
Your first step in the credit repair process is pulling your credit report and looking for errors. An estimated 80 percent of credit reports have errors, and a quarter of these errors can impact your ability to get a loan. It's important to take note of any inaccurate information, particularly late payments that weren't truly late. Disputing these errors and getting them removed will improve your credit score significantly.
Reducing Debt
When applying for a mortgage, the bank wants to assess your debt management skills. Carrying large credit card balances isn't the way to show that you're a responsible money manager. Get your balances as low as possible before beginning the mortgage application process. You'll want to have card balances no higher than 30 percent of your credit limits.
Managing Inquiries
Every time you apply for credit, an inquiry is noted on your credit report. This normally isn't a big deal, and counts for just 10 percent of your FICO score. That said, too many inquiries in a short period of time makes you look like you're desperate for cash, and it might turn a bank off from lending to you. Make sure you have as few inquiries as possible as you prepare to buy a home.
Why Credit Scores Matter
You might be able to get a mortgage with a credit score of 660, but you won't get as good a rate as someone with a score of 740. That difference could add up to thousands of dollars in finance charges over the life of the mortgage. It's in your best interest to get your credit score in the best shape possible before you apply for a mortgage. The higher the score, the less you'll end up paying for the house of your dreams.
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