Get you credit in order before shopping

It's easy to see why financial improvements top this year's list of resolutions. Gas prices, holiday spending and a tighter credit market have paved the way for a focus on money management, especially when it comes to buying or selling your home. Whether you are planning to buy a home or preparing to put one on the market, here are a few resolutions that you can stick to this year. And whatever your resolution may be, getting your credit in order should be high on the list.

"Credit is a determining factor to whether a client can obtain financing and at what cost for the purchase of a new home," said Piero Orsi, president of the Realtor Association of NorthWest Chicagoland. "Lenders consider credit scoring when determining risk associated with any loan application, especially for home buyers."

If you are thinking about buying a new home this year, the first step is to get your credit in order. Your credit score determines what type of financing you will receive to purchase a new home. The U.S. average credit score is 693 according to Experian's National Score Index. Credit scores can range from 400 to 900 and are based on the length of your credit history, the mix of credit you already have and the number of recent credit applications.

Here are a few resolutions that can help you prepare to buy:

Know your credit. Make all credit card payments by the due date. Do the same for all your other bills. Apply for credit in moderation and take on new credit only when you need it. You can get a free credit report yearly at www.annualcreditreport.com, assigned to you by one of the three major credit bureaus (TransUnion, Experian or Equifax).

Clean up errors. Once you know where you stand financially, you can take the steps necessary to clean up your credit report, which could include counseling from the U.S. Department of Housing and Urban Development. A list of counselors can be found at www.HUD.gov.

Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You will probably see some great ways to save.

Develop a budget. Track your spending to create a budget for what you actually spent over the last six months. This will allow you to see exactly where you are spending money and where to adjust accordingly to save more.

Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Start by paying off car and student loans first and pay off credit cards every month.

Increase your income. It may be necessary to take on a second, part-time job to get your income at a high enough level to qualify for the home you want.

Save for a down payment. Although it is possible to get a mortgage with only five percent down -- or even less in some cases -- you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.

Research down payment assistance programs. Many organizations offer assistance to first-time home buyers, including federal loans and mortgage assistance. Visit www.tha.gov to learn more.

Pay yourself first. On a weekly or monthly basis, set aside an amount you want to save toward your down payment. You can even open a special savings account to maintain the money so that you don't spend it impulsively.

Interested in selling your home this year? Resolve to make your home stand out above the rest. This means spending some time improving the interior and exterior appearance of your home before you place it on the market.

"Well-maintained homes with curb appeal that are priced for today's market continue to sell," said Piero Orsi. "It's often a matter of counseling buyers and sellers to set realistic expectations on both sides of the transaction. Your Realtor can help you set a price that reflects the full value of your home and fits in with the changing market."

Here are a few resolutions that can help you prepare to sell:

Create curb appeal. Buyers tend to be more inclined to request a showing if a home's exterior is visually appealing. Keep the driveway clear of snow or ice, trim any bushes or trees that might obstruct the view of your home and apply a fresh coat of paint to the front door.

Clean out the clutter. You can create a more spacious feel to the home by removing excess furniture and knickknacks. The interior decor should allow potential buyers to see the room's purpose, but be able to imagine their own belongings in the space.

Make minor repairs. Fix any broken knobs, switches, faucets, or hinges. What it costs you now in maintenance will pay off come inspection time.

Lighten up. Replace old bulbs with brighter ones to emphasize the details in your home. Open windows and blinds to let as much natural light in as possible.

Remove pets. Although pets can be a wonderful addition to a home, they can also prove to be very distracting during open houses. Move pets to another location during showings.

Appease the senses. Consider baking a pie before your open house. Or burn a candle to fill the home with the scent of cinnamon or apples to create a welcoming scent.

"The Illinois Association of Realtors has tips for first-time buyers and ways to prepare your home for sale available at www.YourIllinoisHome.com," said Orsi. "You can also find the latest information on the Illinois housing market and tips for improving your finances."