A house is often considered one of the best investments a person can make, but earning the keys to a dream home can require a lot of financial-planning work ahead of time. That’s why real estate experts say you need to have a basic understanding of your credit score to buy a house.

When it comes to big-ticket purchases, such as a home, banks need to know you can afford it. For nearly three decades, lenders have used modern-day credit scores as a crystal ball to see a borrower’s financial past and likely future.

If you’re a renter looking for a home loan, you can easily improve your credit by monitoring your scores – there are three – and improving them with these five tips.

Say hello to homeownership in no time!

Pay Your Bills on Time to Earn a Good Credit Score to Buy a House

“A credit score is a rating (used to estimate) how likely you are to have a late payment in 30 or 60 days,”; said Scott Sheldon, a senior loan officer and consumer advocate for Sonoma County Mortgages in Santa Rosa, Calif.

If you have several late payments, your credit score will plummet.

“Fifteen days late or less is OK, but more than 30 days will totally kill your ratings and your ability to get other (lines of credit),”; Sheldon said.

Late payments will show up on your credit reports for seven years, but older infractions will not have as much of an impact as newer defaults.

For example, a collection that is five years old will hurt much less than one that is five months old, according to FICO’s consumer division myFICO.

When you apply for a loan, lenders are requesting your score from at least one of the major credit reporting agencies — Equifax, Experian, Trans Union.

“They’ll look at whether you’ve paid your bills on time and how far behind you are,”; said Paul Sian, a Realtor at Cincinnati and Northern Kentucky Real Estate.

It’s important that you make sure to check all three scores for free yearly, he said.

Take on New Debt to Prove You Are Responsible

If you need to improve a low score (anything below 580), Sheldon recommends taking on new credit cards or other debt and paying it off on time to show you are responsible.

But whether you’re building up your credit score from scratch because you have never had debt or are recovering from some past mistakes, Sheldon recommends going slow.

“Don’t be aggressive with credit,”; he warned. “Applying too frequently will make you look like a risk.”;

He advised borrowers to get one credit card at a time.

If you don’t have credit established, he recommends getting a “secured”; credit card.

“That is something you can build on for six months,”; Sheldon said.

Banks will require you to put down a deposit for a secured credit card, which is used in case you miss payments. You’ll get access to more credit when you make your payments on time, which is one way it will improve your score.

You can also ask a family member with good credit to co–sign on a traditional credit card – one that does not require a deposit – right off the bat to help improve you credit faster.

Diversify Your Credit for the Best Credit Score

When you’re improving your credit, it’s good to have different kinds of debt to prove you are responsible about making payments, Sheldon said.

If you start with a secured credit card, add an unsecured credit card a year later.

A car loan managed responsibly is another way to improve your score, he said.

Eventually — remember, not too quickly — you want to have two or three credit cards. It’s a good idea to open one of them at a department or other store, Sheldon said.

“They work in the extra same manner as traditional credit cards,”; Sheldon said. “If your payments are positive, the credit effects are similar but it looks different.”;

Once lenders see that you can handle a diverse range of credit, they’re most likely to trust you with a big purchase like a home, he said.

Maxing Out Credit Cards Will Damage Your Credit Score

Even if you make all your payments on time, maxing out your credit cards does not look good.

The Realtor Sian, who is also a licensed attorney with a background in residential sales, said you should stay below 30 percent usage.

“Your total allowable credit line multiplied by .3 tells you the balance you never want to exceed,”; Sheldon agreed.

Sian suggests paying down your credit card or loan with the highest interest payment first. It’ll be cheaper for you in the long run.

Make a Plan to Fix Your Credit and Stick to It

“Look at your income and debt and make a plan to improve your score,”; Sian said. “You can increase it by 40 or 50 points within a couple of months if you follow a plan.”;

Sian recommends meeting with a banker or lender for assistance making a plan.

The sooner you start working on your credit score before applying for a mortgage, the better, but give yourself at least six months. And be realistic. Past transgressions can take several years to fall off of your report. You want to get your score up to at least 700 to qualify for a mortgage with a good interest rate, Sheldon said.

To start: You can check your credit score for free online. Both Sian and Sheldon recommend AnnualCreditReport.com.

Happy house hunting!