If you are planning to finally realize the dream of homeownership, you want to make sure that there are no obstacles in your path. For some, having a poor credit score could either prevent getting a mortgage approval or mean that your mortgage is going to cost more than necessary.

Most banks have strict rules governing their lending terms, with a majority of the emphasis being placed on your credit score. If the lowest interest rates are awarded to a borrower with a score of 760 or better and yours is 757, those three points could end up costing you thousands of dollars.

The good news is that you can take steps to improve your credit score. This will not only improve your chances of getting a mortgage approval but also of receiving the best interest rate possible for your home loan. While credit history can't be rebuilt overnight, there are several ways that you can improve your credit score in a short time.

Review Your Report for Accuracy. If you haven't reviewed your credit report recently, this should be your first step. You can get a free credit report each year from each of the major bureaus. Review these reports for accuracy and dispute items that are incorrect. The bureau will either need to confirm the information or remove it from your report.

Pay Bills On Time. It's essential that you pay all of your bills on time, including utilities and any credit card payments. Any late payments will have a negative impact on your credit score.

Lower Your Balances. One of the best ways to increase your credit score is to reduce your credit utilization. If all of your credit cards are maxed out, this shows that you are using too much high-interest revolving credit. Instead of just making minimum monthly payments, pay off as much as you can each month and avoid charging more.

Keep Unused Accounts Open. It may be tempting to close unused credit accounts, but this action could harm your credit score. Having more available credit that you aren't using gives you a lower credit utilization rate, which is a positive factor for your credit score.

Avoid Some Common Mistakes. Some common mistakes prior to filing a mortgage application could harm rather than boost your credit score. Among them are applying for too many new credit accounts in a short period and making a major purchase, such as a new car. You should also avoid going over your credit limit on an account, being sent to collections, or filing for bankruptcy.

Even if you have less than perfect credit, you can still qualify for a mortgage and realize the dream of homeownership. Do what you can to clean up your credit report so that you can maximize your credit score and speak with a mortgage professional at City Bank about your options. The work you put in now will be worth the effort when you receive those keys at closing.