First, you should get a full credit report. You can do this through several online companies like Credit Karma, or if you are working with a lender they should be able to provide you with a copy or at the very least they should review it with you. An experienced realtor, mortgage broker or loan officer should be able to point out the area where you can improve your score in the most effective way.
The next step would be to challenge and get any inaccurate, derogatory information off your report. This is done by writing the three credit bureaus and disputing the discrepancies. You should include any proof you have with your letter. It is also important to tell them that they have 21 days to respond because you are a resident of the State of Maine. Send the letters via certified mail as well.
If you have any outstanding collections, these can be tricky to handle and should be dealt with on case by case basis depending on your score. Ultimately you will want to settle them or pay them off, but you may want to wait until later. Paying off a collection will not remove it and if it is an old collection that is not currently reporting actively it could hurt your score more if you settle it.
Credit cards are generally where a credit score can be improved a lot in a very short period of time. If you have one or more credit cards that have a balance that is over 30 percent of the total amount of your credit line, you should pay the balance down to get you below 25 percent of the total credit line. So if you have a credit card with a $2,000 limit and your balance is over $600, you want to pay that down and keep the balance below $400. This applies for store cards and gas cards. I had a buyer whose credit was almost 80 points low due to two almost maxed out cards, one credit card and a Home Depot card. They had three cards that had zero balances with slightly higher limits. They transferred part of the debt onto those cards with no interest for a year and by lowering all balances, their score went up over the 680 mark in less than two months and they bought their first home.
Also keep in mind you don't want to apply for new cards or have your credit pulled multiple times as this can negatively impact your credit score. Hopefully this helps, or if you want more ideas or assistance, call one of us experienced Realtors.
Matt Trudel- Owner of Five Star Realty, Windham