Credit Scrutiny: What You Can Do to Make Yourself Look Worthy to Creditors

Nobody can dispute that the credit, mortgage, and loan environment is stricter than ever before--except maybe during The Great Depression. There is, however, light at the end of the tunnel. Don't get tunnel vision. Follow these five guidelines to make yourself look credit worthy.

1. Monitor your credit report
Once or twice a year, pull your credit report from all three credit agencies. Go over the reports with a fine tooth comb. Go line by line and mark items that are wrong, not yours, or you don't recognize. You can request your report directly from the three credit agencies, or request all three reports from one place such as www.annualcreditreport.com.

2. Dispute and correct errors
Dispute the incorrect items on your credit report directly to each agency where the error shows. The credit agencies conduct an investigation, which can last up to 30 days. They'll send you a notice as to whether or not the erroneous item is removed from your credit report.

3. Pay your bills on time
Your payment history makes up 35% of your credit score. This means it's imperative for you to pay your bills, and pay them before or on the due date.

4.Keep good records
When you apply for a mortgage or a loan, the lender wants to see the documentation that backs up what you're saying. Be sure to keep accurate records including copies of pay stubs, tax returns, W2s, bank and investment statements, etc.

5. Build your savings
With more mortgage lenders requiring higher down payments, build up your savings if you're planning on buying a home. Live frugally while trying to stockpile your savings. Living below your means for the time it takes you to sock away a 10 to 20 percent down payment is worth it in the long run.

There is no doubt that you're under more scrutiny than ever by creditors, lenders, and mortgage companies. The good news is that there are things you can do to make you look credit worthy when you're under the microscope.