Money Fix: How to make yourself creditworthy

Mortgage rates may have dipped to about 4 percent, but don't rush to a lender until you're creditworthy.

At least six months before you're ready to buy, review your credit report. You can get one for free online at annualcreditreport.com.

"It's a snapshot of your financial behavior that lenders will use to determine if you're a reliable borrower. They'll be checking to see if you have defaulted on other debts and the total amount of debts you have outstanding," says Leslie Tayne, an attorney in Melville specializing in financial issues.

Know the red flags. Lenders will look for late or missed payments, delinquent accounts, accounts in collection, judgments against you and any bankruptcy or foreclosure actions.

Boost your credit score. Aim for 720 or higher. Fix maxed-out cards. Pay down balances to no more than 30 percent of the total credit limit. This helps increase your score, says Gerri Detweiler, director of consumer education for credit.com. Debt-to-income ratios are critical, says Peter Grabel of Luxury Mortgage Corp. in Stamford, Connecticut. If your ratios are high, don't use your credit card for large purchases just to earn reward points; write a check.

Say no. Don't open new cards or take out other loans within six months of applying for a mortgage, says Kelley Long, a Chicago financial planner and member of the National CPA Financial Literacy Commission. Don't close out cards, either; that reduces your available credit and boosts the percentage of available credit your other card balances represent.

Dispute errors. If you find mistakes on your report, contact the credit bureau.