If you're wondering how to improve your credit score, start with these eight tips.

If you want to pay less for your next home, having a good credit score is key. You may end up with a lower mortgage rate, less expensive mortgage insurance and even more affordable homeowner’s insurance. Here’s how to help improve your credit score to get the most for your money when buying a home:

1. Monitor Your Score

It’s smart to track your progress by monitoring and checking your credit score periodically. You can obtain reports for free at the government-sponsored website AnnualCreditReport.com. The major bureaus, TransUnion, Experian and Equifax, must provide consumers with one free credit report per year. You can also purchase a report for a nominal fee at any time, so to stay on the safe side, try to request a report every four months to make sure nothing unexpected finds its way into your credit history.

2. Pay on Time Consistently

Payment history is the most important variable when determining your credit score. Every satisfactory payment helps build a better score, and payments that are more than 30 days late hurt it. In fact, the higher your score, the more damaging a late payment will be. Keep in mind that if you have a good history with a creditor and make one late payment, you may be able to ask for it to be removed from your report.

3. Avoid Collections

If you have an account that’s headed for collections, negotiate for a complete withdrawal of the derogatory information (in writing), or at least a “paid-in-full” designation before you pay up. If you get a threatening letter from a creditor, don’t ignore it and take action immediately to avoid damaging your credit score.

4. Have More Credit, Use Less

Credit utilization is an important ratio that’s the amount of credit used divided by the amount of credit available. Individuals with “good” credit scores keep this ratio under 30 percent. However, consumers in the “excellent” credit tier have ratios under 10 percent.

Opening up new accounts can help by increasing your available credit, but can also cause your score to drop temporarily because your application for credit results in an inquiry. The new account will also lower the average age of your accounts, so you might be better off asking one of your current creditors for an increase in your credit limit.

5. Minimize Inquiries

To achieve excellent credit, keep the number of applications for credit to a minimum. Each application can lower your credit score by up to five points. FICO doesn’t penalize you for shopping for mortgage rates (all inquiries within a 45-day period are treated as one), but inquiries for other financing raise red flags.

6. Mix Things Up

Consumers with the highest credit scores have a mix of credit, such as a credit card or two, installment accounts like a car loan or student loans and a mortgage. In fact, taking out a mortgage and paying it faithfully is a great way to increase your score, especially if your credit history is not extensive.

7. Get a Little Help

In order to generate a FICO score, you need to have at least one account that’s open for at least six months, and at least one account that has reported to a credit bureau within the past six months—they can be the same account. However, you can boost your score significantly if you have friends or family with excellent credit who allow you to become an authorized user on their accounts.

8. Clean It Up

About 25 percent of all credit reports contain errors, and some can unfairly lower your score. Check your free credit report for payments that were wrongly reported as late, overstated balances, and accounts or inquiries that don’t belong to you. Submit proof of the error to the bureaus and these mistakes will be removed.

Typically, lenders look for at least a 620 FICO score during the application process, however there are alternative loan options available for those with lower scores. If you need to beef up your credit score, it can take anywhere from a few months to a year to see an improvement, but If you’re wondering where to begin, start with these eight tips. Then when you go to purchase a home, you’ll be able to save money in more than one way. If you’re ready to start the homebuying process, head to Owners.com.