Insurance companies determine your insurability and your policy premiums based on how many "layers" of risk they must manage for you. Bankers and mortgage brokers handle mortgage requests in a similar manner. They add up borrowers' financial risk factors to determine one thing: Will they repay their mortgage as promised?

Mortgage lenders use credit history and credit scores as major elements of their risk analyses. Because credit scores play such a crucial part of the mortgage process, you will benefit from a few simple tips.

If you know you have credit issues, handle them immediately. Credit problems tend to go from bad to worse quickly. A seasoned mortgage professional can tell you whether a credit counselor or an attorney may be in order. He may also provide a "road map" toward your future home purchase.

Treat open credit like gold. Make at least your minimum monthly payment on time all the time. It's the best way to improve your scores.

Do not close all of your credit accounts if you are trying to increase your credit scores! If somebody tells you to do so, you are listening to a fool. How can you prove you can properly manage your credit if you have no credit open? If you properly maintain three to five credit accounts and keep each of them below 50% of their respective max credit limits, your credit scores will fare well over time.

Do not fear if you have a credit score but not much of a credit history, or if you have credit accounts that are not scored. There are mortgages available for most borrowers in these situations.

If you are in financial duress and have a good amount of equity in your home, freeing up that equity for debt relief or for a cash infusion may really help your situation. I call it "stopping the bleeding" because it's usually a first step in getting a financial recovery in place. Sooner is always better than later for managing credit issues of any kind.

Timothy Phillips is a mortgage banker and newspaper columnist.  Homebuyers should always consult a professional for guidance specific to their situation.

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