It is always best to prepare well ahead of time for a home purchase, whether first time or fifth time. We like to begin coaching clients three to six months prior to beginning a home search, to be sure our clients are well-prepared. Your Credit score is extremely important for loan-qualifying purposes, and in order to attain the lowest interest rate.
1. DON'T close any revolving credit accounts; pay them down or off but continue to use them periodically.
2. DON'T pay off any collection accounts; activity in the derogatory section of your credit report can lower your scores. If needed they can be paid through escrow.
3. DO keep all your balances at or below 30% of available credit.
4. DO make all credit card payments on time. A late fee incurred is not reported, unless an account goes 30 days late.
5. DON'T cosign on a loan for someone else. If they miss a payment, your credit will be affected negatively.