When repairing your credit is the first step down the path towards home ownership, many find the following advice helpful.

My first recommendation has nothing to do with the credit scores but is a general one for anyone wanting to prepare themselves for a larger monthly housing payment.  Set up a savings account just for this purpose.  Call it your emergency fund or something that will encourage you to leave it alone to grow.  Deposit the difference between what you pay now for rent and the maximum housing payment you think you can afford every month – in this example, $1600 (loan payment) - $1200 (current rent) = $400 (monthly savings deposit).  Worst case, you will have this fund to turn to when something urgent requires you use the savings.  Best case, you will have a tidy sum to use for down payment and closing costs when your credit repair work is complete.

Next, make believe you are starting over after a bankruptcy.  In other words, no late payments of any kind on your active accounts from this point forward.  If that means you occasionally skip on the above savings deposit, so be it.  Over time, this will be a great benefit to your credit scores as the old problems age and become less important to the scoring system.

Also, you can try to get your balances owed down to 50% or better yet, 30% of the high credit limit on each revolving account.  You can expect two benefits from good credit usage.  First the amount of credit used versus available on your accounts looks good when you keep usage below 50%.  Second, you create a good use of current credit which starts to offset the older credit problems.  Start with one account and later, after you have several months positive experience, a second, etc..

Pay off legitimate obligations such as judgments.  Home mortgage lenders will not offer credit to anyone with an open judgment because it can become a lien against any real property (home) you own.

Correct errors on the report.  I list this last as individuals all too often are coached to concentrate on past errors when they more correctly should be focusing on how to establish good credit for their future.

You can go to credit bureau web sites (www.annualcreditreport.com) and find many other suggestions but these should go a long way to building your credit scores for home ownership.  Be very cautious and careful about using any “silver bullet” approaches as they will most certainly have high up-front costs and no guarantee of results.  Remember, your current credit situation took a long time to get to where you are now so it is OK if it takes some time to get it corrected.

Good Luck