There are three major consumer reporting agencies (CRAs), or credit bureaus, that mortgage companies use to assess a buyer’s credit score: Experian, Equifax, and Trans Union. Credit scores typically range from 300 to 850. For home loan purposes, a score of 650 or higher indicates good credit history and will make it easier for you to obtain a mortgage. If your score is between 620 and 650, your borrowing capacity will be looked at more closely. And if you qualify below 620, you may be in a credit crunch.

When you’re in the market to buy a home and find you have bad credit and a low score, don’t despair. Although you may delay buying your home, there are ways to repair your bad credit so you can still qualify for a home mortgage at a decent interest rate.

To assess your credit score, you will need to obtain copies of your credit reports from various agencies. Examine them carefully to see which transactions are lowering your score.

A special note about bankruptcies: A bankruptcy can lower your credit score by 200 points or more. Repairing bad credit after bankruptcy is beyond the scope of this article.

Cancellations: Chargeoffs appear on your credit report if a creditor has given up trying to collect from you and ends up writing off the amount you owe as a bad debt. Cancellations are one of the main reasons loan applicants are denied credit.

How to fix it: If you have charge-offs, contact those creditors immediately and make arrangements to pay off the old debt. After a few months of regular payments, or if you pay a canceled debt in full, send a written request to that creditor to change the status on your credit reports.

Late payments: Late payments are handled slightly differently depending on whether they are isolated incidents or recurring issues.

How to fix it: If you have a single late payment here or there on your credit report, the best thing to do is contact your creditors by phone to discuss the situation. Follow up the conversation with a written request to have isolated late payments removed from your reports. However, if you are consistently late on payments, fixing the problem is a bit more complicated. You will need to start by establishing a pattern of paying on time over several months. Once this positive pattern is established, call your creditors (and follow up in writing) and let them know you’re back on track. With persistence and patience, you may be able to remove these score-lowering marks.

Report bugs: Sometimes creditors just make mistakes when reporting to the agencies. Other errors may include charge disputes that resulted in an initial late payment that was eventually reversed. Unfortunately, it is the individual’s responsibility to spot, and fix, reporting errors that lead to bad credit.

How to fix it: Once again, contact your creditor by phone and follow up with a written request to have the error corrected. Because the Fair Credit Reporting Act (FCRA) requires credit bureaus and their information providers to investigate reports of inaccuracies, you’ll also want to contact the CRA directly to report the discrepancy.

While you are working to repair your credit score, there are other things you can do to improve your score:

• Make sure you pay all your monthly bills on time
• Avoid opening new credit card accounts, including department store cards
• Work to pay off your unsecured debt, but keep accounts open even if you pay them off.
• Pay cash for the things you need instead of charging for them

If, after all your work, you still score below the 620 mark, it doesn’t mean you won’t qualify for a home loan. However, it may mean that your mortgage will take longer to process and that the terms and interest rate may not be as good as you expected. Talk to your real estate agent about referrals to subprime lenders.

Repairing bad credit can take months to a year or more. But when you’re ready to buy a home, you’ll be glad you took the time to improve your score, and your mortgage payment will be lower because of your efforts.