Your credit history is a critical factor when obtaining a mortgage loan. It communicates your past willingness and ability to meet credit obligations and gives the lender a good idea about how responsible you will be in making your monthly mortgage payment. Do not despair if your credit report is less than stellar. If you've made some mistakes in the past but your current credit patterns are good, many lenders will take that into account and may be willing to make you a loan.

Get a copy of your current credit report. Verify that all of the information is correct, and if it's not, contact the credit reporting company and have them make corrections where possible. If the inaccurate information involves debts that are still outstanding, or other derogatory information reported by your creditors (such as department stores, hospitals, contractors, etc.), you will need to contact the creditor(s) and work out a way to have this information removed from your credit report.

It's important that you do everything possible to make your credit report as clean as possible before applying for a loan. One of the best things you can do is pay off all of your credit card debt and then close all of your credit card accounts except for one or two at most.

The bottom line is that a good credit report is your passport to obtaining a loan. A bad credit report won't necessarily prevent you from getting a loan, but you may need to do some work to clean it up and make it acceptable to a lender before they'll make a loan to you.