Credit Score: 8 steps to improve yours in less than a year

First-time home buyers, especially young people, may have never seen their credit score or even considered their credit worthiness, but when they want to buy a home, that changes.
These days, a credit score of 700 is usually considered a good starting point for a home loan. However, FHA loans may be more lenient.
But the most important thing is to start immediately to establish, build or improve your credit.
Here is our One-Year plan for better credit that works for everyone, not just first-time homebuyers:
1 Go to annualcreditreport.com and look over your free annual report from each of the three credit reporting agencies. Look for errors. Then immediately take steps to correct them.
2 Pay your bills on time. You must never be late even once. One of the most common comments bill collectors hear from young borrowers is: I have the money, I just forgot to pay the bill. Stop forgetting. You must establish an ironclad history of paying your bills on time.
3 Work on getting your credit balances below 50 percent of your maximum credit limit. That raises your score. If your balances are below 30 percent, it raises your score again.
4 If you don't have a credit card, look into establishing a secured card. With a secured card, you send the card company a deposit and then they send you a credit card. You can only use the card for the amount on deposit. But when you get the card, you should use it. Buy something, and then make your payments perfectly.
5 Don't apply for a store account every time the clerk says you can save 10 percent. Each time you fill out an application, the company hits your credit report. Inquiries like these count against your credit. Don't make applications for credit unless you actually need it.
6 If you have unused credit accounts, don't close them if you are planning to apply for a mortgage. That can actually make your score drop.
7 During your credit improvement year, don't buy a car. Lenders don't want to see buyers committed to several large credit accounts. Never finance a car before you try to take a mortgage.
8 Plan to open three new credit accounts during your credit improvement year, even if they are secured accounts. Be sure to space your new accounts by three months. Use each account and pay each off COMPLETELY every month. This is the kind of credit management that improves your credit score AND teaches you how to manage credit.