Take some time to review your credit score and report - big impact potential on future home purchase

While you are thinking about a future home sale or purchase, you should also spend some time reviewing your credit score.  Your score can make a huge difference in the interest rates available to you, which then affects how much house you can afford to buy.  Now is the time to review your credit report and see where you can do some improvement. If you are concerned about your current score, there are credible companies in the market to help with credit improvement.

Everyone is entitled by law to get a copy of both their credit score and credit report annually.  The score is valuable in knowing what lenders are looking at, and your report is great to help you see details on payment history, utilization etc.  

 According to Stacey Smith at Experian.com, your credit score is determined by five different categories of information in your credit report.

1. Payment history is by far the most important factor of your credit report. It's essential to pay your bills on time, every single time. Any late payment is going to have a significant effect on credit scores. Your payment history accounts for about 35% of a credit score.
2. Utilization, which is the balance-to-limit ratio on your credit cards, is the second most important criteria. You never want a balance to be higher than 30 % of the credit limit on a single credit card or in total. To determine your utilization rate, add up all of your balances and all of your credit limits and divide the total of your balances by the total of your limits. That percentage should not be more than 30% as a maximum. The lower the percentages, the better. It's ideal to pay your balances in full each month. It has been found that the people with the best credit scores have zero late payments and utilization rates of less than 10%. Your utilization rate accounts for about 30% of your credit score.
3. Length of credit history, which is based on the length of time each account has been open and your credit mix, which is the different kinds of accounts you have including mortgage, credit cards, auto loans, etc. Having a variety of credit types can increase your score slightly, but you should not apply for a number of accounts all at once to try to improve this element. Doing so will do more harm than good because of the next element.
4. Recent activity looks at how much credit you've received or applied for in recent months. Specifically, it will look at if you have applied for new credit in the past 3-6 months, new inquiries, and whether you are paying off accounts or taking on more debt.
5. Overall capacity, such as how much installment debt is outstanding.

If you get a credit score, it will list the risk factors that are most affecting that number. You should focus on those factors and address those issues on the credit report and your scores will take care of themselves.