The most important factors affecting your credit score
The most important factor affecting your score is the length of your credit history. This is why college students have low scores, while us 30 somethings have high scores. If you have too many accounts open, this can drag down your credit score also. Opening up all those department store credit card accounts and excessive financing accounts points you in the wrong direction, so your beacon score takes a hit. My credit score would have been higher if I did not have the excess luggage of a department store credit card, an appliance store credit card, and 2 different computer store finance cards that I no longer used. What's worse, one computer store is defunct, yet my account still appeared on my credit report as open. I called all 4 sources and closed these accounts since I never use them. It takes about 30 days for it to appear on your credit report. Once you successfully dispute and remove negative items from your credit report, wait 30-60 days and order another copy of your credit report to verify, and you should also see a higher score.

The house you can afford depends on your current income and debt obligations. You must be able to pay your mortgage, satisfy all your current debt, and still have money leftover each month to put in the bank. For many people this will actually put them in a lower priced house than they anticipated. Don't play the game of expecting to get raises every year, thinking that eventually you'll be able to afford the higher payments, most raises are 4% to 7%. In bad times you won't get a raise, while inflation overtakes you. What can happen is you'll get laid off and you won't be able to afford your monthly bills. If you don't have a budget worked out on a spreadsheet, you have a serious debt problem waiting to happen. If you cannot recite from memory all the creditors you owe and how much you owe them, you have a credit problem.

Where is your down payment coming from?
Most banks don't want you to use money from family as a down payment. They figure that without that money you can't afford the house. So if you plan to get money from your family, put it in your bank account at least 6 months before you apply. This is because most mortgage lenders only check 3 months worth of bank statements, and you'll be hiding below the radar.

When is your income not considered income?
Items that you think will help you get approved will often prevent you from getting approved. For example, if you derive income from a corporation, many banks will not acknowledge it as an income basis for a mortgage if the corporation has not filed at least 2 years of tax returns. So if you earned $100,000 from your corporation, it will not count if the corporation is a only year old. This is because many companies are fly by night and go out of business. Also, self employed people have a real tough time getting approved, and often must put down 25-35% to be approved for a mortgage. Pay down your credit card debt as low as you can, then get your Credit Report.

Being Self Employed Is A Bad Thing To Do To Your Credit
This is one reason why I recommend that you never list yourself as self employed, it's the worst thing you can do for your credit rating. Many banks won't even touch you for home or auto loans if you're self employed. Talk to your tax advisor about this, but I felt better off incorporating, now I'm an employee with a verifiable W2 form, not a self employed person. This makes all the difference in the world. Also, if you're self employed, all liabilities flow through to you, but in a corporation, the corporation usually assumes all the liabilities.

Before you plan for your future, you better get in touch with your past
Your Credit Report is the single most important item. If you're going for a mortgage, don't get the free credit reports or the $8 reports you see on the Internet, they simply do not have enough information for you. The "merged comprehensive reports from the big 3 credit bureaus" are the ones to get, from sites like Consumerinfo, True Credit or Equifax. These Credit Reports cost a bit more, but remember you are about to make the biggest purchase of your life and you only get one shot at getting it right, so get a 3 Bureau Online Credit Report, the banks do it and you do it also.