If you have bad credit you should quickly resolve items that may be pulling down your score. Thirty-five percent of a credit score is determined by payment history, so ensure that all bill payments are paid on time. Never forgo even making that $10 minimum payment.
Open a secured credit card with a lender that reports to the credit bureau. Pay all outstanding collections or find a reputable credit expert to help negotiate a settlement on these items. You can get an instant boost of 15 points or more to your credit score.
Pay down revolving credit accounts such as unsecured lines of credit and credit cards. Don't apply for a consolidation loan if you intend to purchase real estate in the near future. While the merits of doing so are admirable when you are trying to reduce debt, the higher balance reported relative to the approved limit of the consolidation loan in the first year or two will artificially lower your credit rating.
Also, don't shop for credit during your mortgage application process right through to the final closing. Many mortgage lenders do a second credit check prior to advancing funding and this can result in the mortgage now being declined if your score drops further from where it was when the original application was made.