If you are planning on buying a new home or refinancing with an FHA mortgage, it's going to get tougher if you have bad credit. In a few months, FHA will not let people with credit scores of less than 580 buy a home with only 3.5% down.You'll have to come up with at least ten percent!

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This combined with the pending expiration of the home buyer tax credit should provide plenty of incentive to buy now. But if you need more, your upfront mortgage insurance premium (MIP) will increase from 1.75% to 2.25% (but it can be financed). And sellers won't be able to buy your interest rate down with 6% seller concessions anymore -- they'll be limited to 3%.

So if you can't buy now, you've got to improve your credit -- probably easier and faster than saving an extra 6.5%.

The most expedient way to improve a credit rating is to make your payments on time (duh, sorry, I know you've heard it before) --payment history comprises 35% of your credit score. Try setting up electronic payroll deposits to your checking account and arrange automatic payments to your creditors. Putting payments on autopilot eliminates lates due to forgetfulness or procrastination. How about your collection accounts? If they're pretty new, pay them off pronto. But if they've gotten crusty, don't touch them. Your most recent credit behavior counts for so much more than your ancient payment history, and by updating a collection account you bring it back front and center. If your score is low because your credit cards are maxed out, pay extra each month, and (duh, again!) stop using the cards. Credit utilization makes up 30% of your credit score. By reducing balances and paying on time, you'll improve both the history and utilization parts of your FICO score. Try this for maybe six months, pull another credit report, and see if you're above 580.