Start getting your credit up to speed 6 months before you expect to buy. You need this time to clean up your credit report, and get funds that are contributed by family into your account long before the lenders go looking for it.

Most lenders do not allow money given to you by family members to count toward a down payment, so you have the monies seasons into a bank account prior to the closing. Additionally, ask your lender their policies on “gifts of equity”.

You can get your credit report from sites like FreeCreditReport.com or any of bureau’s respectively. (TransUnion, Equifax, or Experian) You should get your credit report at least once every year to verify it for accuracy, and make certain your credit score is up to par. If your credit is clean and you have your down payment ready to go, you won't need as much time to plan. Buying a home is a very serious investment that must work right on the first try with no mistakes. Patience and planning wins this game, do not be impulsive.

Why is your credit score so important?

Everyone has a credit score calculated at the time your credit report is requested. It's based on over 100 different proprietary variables and algorithms developed by Fair Isaac (FICO). The range is 300 to 850. Most lenders consider people above 650 to be prime borrowers, meaning they will most likely be approved at favorable rates. According to my credit report from Equifax, 71% of the people with a credit score from 500-550 will default on their credit. Another 51% of buyers with a credit score from 550-600 will default on their credit. That's pretty scary. This is why lenders run your credit report and head straight for your FICO Beacon score.

What does a low credit score means for your mortgage?

Your credit score is an important factor determining whether you'll get approved for a mortgage, car loan, refinance loan, or credit cards, and what your APR will be. If your score is low, you'll most likely have a higher interest rate.

What factors affect your credit score?

The most important factor affecting your score is the length of your credit history. If you have too many accounts open, this can drag down your credit score also. Opening up department store credit card accounts and excessive financing accounts can point your credit score in the wrong direction. Try to have an equal balance different types of credit lines (education, credit, consumer, etc.) and keep comfortable balances that you can manage on a monthly basis without maxing out any individual lines.