With good credit, you’ll get a good deal on a home loan.  Here are four ways to help clean up your credit so that you can get a good home loan.

1) Monitor your credit report and correct any errors.

Consumers are able to request a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies.  By monitoring your report once a year, you can watch out for mistakes on your credit report.  If you find a mistake, write to the credit-reporting agency to explain why you believe there is an error, and send along any documents that support your claim.  You can request your free credit reports by visiting the secure website AnnualCreditReport.com.

2) Know your credit score and work to keep it high.
When it comes to credit scores, the higher your number, the better.  Scores range from 300 to 850 and are calculated by noting whether you’ve paid bills and loans in full and on time.  If you’re applying for a home loan, you’ll typically need a score of at least 620 and will get the best interest rates and terms with a score of 740 or higher.

In order to keep your credit score high, you’ll need to pay all of your bills on time.  It also helps to pay balances off in full; if you can’t pay in full, make at least the minimum payment, and submit that payment on time.

Though your credit score isn’t typically included with your free credit report, you can obtain the number through any of the major credit bureaus — Equifax, Experian or TransUnion — for about $10.

3) Use credit wisely and don’t use all of the credit you are offered.

Pay off as much credit card debt as possible and transfer any high-interest balances to lower-interest credit cards.  Credit scores are also based on how much credit you use compared with how much credit you’ve been offered. For example, if you have a credit card with a $1,000 limit, maxing out the card will give you a lower credit score than carrying a balance of say, $200 will.  Opening a new line of credit (thoughtfully and occasionally) will also boost your total available credit, positively affecting your credit score.

4) Pay attention to the length of your credit history.

Managing a line of credit responsibly works in your favor.  If you’ve had a credit card for a long time and have always paid on time (and often in full), your credit score will be higher than an individual who has not maintained a solid credit history.  Opening and closing accounts thoughtlessly, however, can negatively affect your score.  Opening several cards at once can lower the average age of your accounts, which lowers your credit score.  Furthermore, closing accounts lowers your level of available credit; in general, it is best to keep cards open even if you’re not using them.

It can take time for your credit score to go up once you’ve started working to improve it, so be patient and keep at it.  The longer you keep up good payments, the higher your score will become.  Making payments in full and on time will set you on your way to a higher credit score and, eventually, a good deal on a home loan.