Your credit score is not the only factor that mortgage lenders take into account when configuring the best loan for you, but your credit score will impact how much you will pay in interest. In college you had to pass a lower level course in order to continue your curriculum, well think of your credit score as a prerequisite for obtaining cheaper home financing. Mortgage lenders will look at your credit score to determine whether or not to approve it and to determine if you are a risk. The higher your score the less of a risk your loan will be and vice verse.

Here are 5 ways to prepare your credit for buying a home.

Know Your Credit

At least 35% of first time home buyer clients haven’t pulled a credit report prior to starting their search. Make sure you are aware of what your credit score is at least three months in advance just in case there are errors that you need to correct. You can get your credit report for free at websites such as Check if your credit report has errors such as late payment reports. Look for paid accounts that show up as unpaid or worse, accounts that are not yours. Dispute any inaccuracies immediately.

No Credit at All is a Problem

Regular conventional loans require that the applicant has at least three credit accounts that have been active for a minimum of 12-24 months. This type of credit could be a car loan, school loans or major credit cards. FHA loans require you to have a least two credit accounts, but if you have more it does not reflect in a negative light. This is as long as you never charge over 30 percent of your limit nor max out your credit cards.

Old Credit Cards Need Love Too

Whether you have an old student visa for way back when or your first $100 dollar credit limit card still sitting in your drawer, never toss it away or close the account. Old accounts are helping your credit because age of credit is one of the pillars of determining your credit score.

Avoid New Credit Lines

It’s always temping to save 15 % percent at the cash register for your new bedroom set just for opening that department store credit line. New credit cards will create an inquiry on your credit. Too many inquiries can negatively affect your score. Avoid new credit cards until after you buy your home. You can open a new line of credit literally the day after you have your new keys if you feel the need.

Debt to credit Ratio Matters

The most exciting part of buying a home is going out and buying new furniture and everything you had picked out at Bed Bath and Beyond. Even if you are in escrow, if your debt is being used above 30 percent of your credit limit before you close on your new know there is a risk of disqualification. Keep your balances low on all your revolving credit. This is a good rule in general, but especially when buying a new home.

There are many other factors that help your credit score – what are some of your best tips? Leave a comment below!