Thinking about buying soon? Make sure your credit is in order

There's no more important time to work on your credit score than
when you're about to apply for a mortgage. Improving your credit can
save you a ton of money-we're talking about thousands of dollars over
the life of the loan. Here are the actions you can take that will have a
notable impact on your score.

Pay down your credit card balances
Credit utilization is one of the biggest factors in determining your
credit score. Your credit utilization should at least be less than 30
percent of your limit, and it's even better if you can get it below 15
percent. This rule applies to both individual cards and your overall
credit limit.

It may even be worthwhile to use some of the cash funds you were
planning to use for a down payment to pay off credit card balances.

Do no harm
While you certainly want to improve your score if possible, at the very
least you'll want to keep it steady. Avoid opening new lines of credit
if you're applying for a mortgage in the very near future. This will
cause a hard inquiry to show up on your credit report.

Take care of negative items
It's good practice to check your credit report for negative items a few
times a year-you can get one free report from each of the three major
bureaus (Experian, Equifax, and TransUnion) per year.

If you find any negative items (collections, late payments, etc.),
write a letter to the original creditor. Explain the circumstances that
led to the negative item, and request that it be removed from your
report. It can be surprisingly effective, and removing a negative item
will improve your credit score in a hurry. You can find some good
templates for a request letter online.