If you have a low credit score, only because you haven't had any credit, apply for credit with a local business; such as a department store or a local bank or credit union. These local merchants may have lower credit standards than larger lenders. Then, make use of that credit being sure to pay promptly. You can avoid any interest charges when using credit cards by paying before the due date on your bill.

If you are having difficulty opening a credit account of any kind, consider asking a friend or family member to co-sign your loan or credit card application. You may also be able to get a secured card, which you guarantee by a deposit you make with the card issuer.

Always pay your bills on time. This is one of the best ways to get credit and improve credit. Lenders see a history of on-time payments as indicator of good credit risk.

But that doesn't mean your credit history must be perfect for you to qualify for a mortgage home loan. Bad credit because of late payments can be changed over time. Your best bet is to pay all bills on time.

Let's say that you misplace a bill this month from your electricity company and you realize your payment will be late. You decide to wait until next month and just pay both months at once. Don't!

You do not want any payments to arrive over 30 days past the due date as this will be reported to the credit bureaus. Also, the later the payment arrives the more damage can be done. Most companies will also report late payments as 60, 90 and 120 days late. So, if you happen to miss a payment make sure to send it in right away.

Another factor any mortgage lender must assess before offering you a mortgage approval is your total debt. If a large portion of your income each month is already committed to paying off other debt you'll have a hard time getting that mortgage. The amount of your monthly debt payments compared to your income is referred to as your debt to income ratio.

As a rule of thumb, non-mortgage debt payments should not exceed 10-15% of your take home pay each month.

If you have bad credit due to too much debt, one option is consolidate your other debt as part of your mortgage. In effect, you will get enough cash to pay off the other debt as well as pay for your home.

Oftentimes, you can drastically lower your monthly payments in this way. It also leaves you with just one monthly debt payment rather than several. With one payment, it's easier to track and be sure that payment is on time. It's one way to increase your credit rating and credit scores, while also making your financial situation easier.