Maybe this is your first trip down the path of home ownership or it could be your 20th. That number does not really matter because even though the basic guidelines are still there a lot of legislation has brought about much change in the process. This is especially true over the last 7 or 8 years. Whereas laws purportedly have been placed to protect the consumer I see the shift as one which protects businesses such as lenders and insurers. Their former risks have now been squarely placed on the consumer's shoulders.
Step one is very simple, order your credit report by calling ANNUAL CREDIT REPORT at 877-322-8228. You'll receive it 100% FREE and within about 10 days. It's the law! You're allowed to do this once a year for FREE with Trans Union, Experian & Equifax, the leading reporting agencies. They'll arrive with full instructions how to understand the report and what to do if a correction is needed. There will ultimately be mistakes so review the form carefully for items you know aren't yours or are just plain wrong. You're not going to see your FICO score here. This is only to get a handle on how current your payment history is and basic information on improving it.
The old days of stopping in at the bank and having a cup of coffee with its President can't get you the loan approval like it used to. Granted there is some discretion left to managers and officers but not many will "stick their necks out" for you. To avoid the process entirely we could save what we need to buy our homes plus closing costs and that alleviate these issues, but alas, America is a debt ridden society. Maybe next century folks!
There's no real trick to the credit matrix of the leading reporting agencies. For best results, pay your bills on time (by the billing date is better), only use a maximum of 10% of your avalable credit (keep a 3 to 5% balance if you can), Try to limit yourself to between 5 and 7 major credit cards. Because the systems are computerized they like to see payments that bring the balances down to the next 8 or 9%. As an example say your credit line is $5,000 and your bill comes with a balance of $1,054. The minimum payment is $48 but you always pay 10% or in this cas $105.40, Try taking that to it's best scenario and pay $116.00 or roughly 11% instead. You'll thank me for it later. If you have existing bad debt, lesson learned and start anew with a better awareness.
Credit is a funny thing, we don't need it if we have money but if we don't it's a hard thing to do without.
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