There's nothing like waiting for a mortgage loan approval to bring home the real costs of occasional sloppiness (or outright neglect) in managing your debts.

All those little transgressions -- the credit card payment that didn't make it to the mailbox on time, or that errant cell phone bill that you have vowed not to pay until hell freezes over -- can come back to haunt you by lowering your credit scores. Those scores not only dictate how high an interest rate you will pay on the mortgage, but, if they're bad enough, they can also severely limit your choice of loan types.

The good news: There's plenty you can do by yourself to pump up those scores, in a relatively short time. If you're already into scary debt territory, there's reputable, inexpensive help available. And it's probably not from the folks you see on midafternoon TV commercials promising to wipe out your debt.

At least six months before you start shopping for a home loan -- or longer if you suspect there might be problems -- buy a copy of your FICO credit scores and the three credit reports that determine those scores. FICO scores, reported by the Fair Isaac Corp., range from 300 for the worst credit profiles to 850 for the best, based on information from your credit reports maintained by the three major credit bureaus, Experian, TransUnion and Equifax.

A new federal law says consumers will be eligible to receive a free credit report once a year, but the program is being rolled out gradually, from the West Coast to the East, and isn't scheduled to be available to Washington area residents until Sept. 1, 2005.

If you're thinking of taking out a home mortgage, your best choice probably is to buy the $38.85 package of three credit reports and the three corresponding FICO scores from www.myfico.com.

"The first issue is to get a credit report and correct problems," said Gerri Detweiler, author of "The Ultimate Credit Handbook" (Plume, 1997, $15). Mistakes, such as a report that lists credit cards belonging to a stranger with a last name similar to yours, will lower your score needlessly, so you should have the errors fixed. (Each credit bureau provides you with its own directions on how to fix mistakes.)

If you are already into the loan application process and discover a mistake in your credit report, your mortgage loan officer may be able to get a "rapid rescore" for you, Detweiler said. You will have to get the lender to give you proof of the error, which isn't always easy, but at least it's worth a try, she said.

Translating the Scores

The best mortgage interest rates are available to borrowers with a FICO score between 720 and 850. Earlier this week, such a borrower would have received a rate quote of about 6.19 percent on a 30-year fixed-rate loan, according to the MyFICO Web site.

Slipping down to the next tier, 700-719, will raise your interest rate by about 0.13 percentage points, which translates to $12 per month on a 30-year fixed-rate mortgage for $150,000, according to the site. But while the difference between perfect and good enough isn't that great, the difference between a good FICO score and a poor one can be huge.

Not only will you pay a higher interest rate, but you will be offered fewer loan choices. That could mean being offered only adjustable-rate loans, even though you might prefer a fixed-rate loan. You also might be stuck with a nasty prepayment penalty if you try to refinance to a better loan within two or three years.

With a score of about 620 or lower, you're in the subprime mortgage market. That means your scores aren't high enough to qualify for a mortgage that generally would be purchased by Fannie Mae or Freddie Mac, the two government-sponsored corporations that buy mortgages from lenders and repackage them for sale to bond investors. That would have jacked your rate this week up to 8.53 percent, according to the MyFICO Web site.

However, that doesn't mean you can't get a mortgage. High-rate subprime loans are especially profitable, and there are plenty of investors other than Fannie Mae and Freddie Mac that will eagerly buy them from lenders. But, while you will be able to get the loan, as a subprime borrower, you will lose the consumer protections that come with Fannie and Freddie's loan standards. Consumer activists have long pointed out that subprime borrowers are the most susceptible to predatory lending practices.

The lowest score that can still qualify for a mortgage is about 500.

Fair Isaac spokesman Ryan Sjoblad said you can make significant progress on improving your score within a year to a year and a half.

What does improving a score involve? The things that can really help are getting rid of past-due balances, paying off your highest-rate debts, making payments on time, and generally putting more time between your bad-credit days and today.

The people most at risk of being taken advantage of actually are not those with such rock-bottom scores, said Chris Larsen, chairman and chief executive of online lender E-Loan Inc. Instead, those most at risk are those right on the cusp of having good credit. "This is an area that's highly abused," he warned.

Because subprime loans are so profitable for lenders, some loan officers may push you into a higher-rate subprime loan, even if you might be able to qualify for one of Fannie and Freddie's "conventional" loans. "Scores of 600, 620 or 640 are really close," Larsen said. "If you're close, you should point-blank ask the loan officer, 'Did you try running me through the Fannie/Freddie program?' "

There are some offsetting factors that can help make you a better credit risk, despite FICO scores that are on the edge. Having a large down payment -- maybe 25 or 30 percent of the home's price -- is a big one. So is having a significant amount of savings still in the bank after you have closed on the home. A stable job with a good income is another selling point you should underline for the loan officer. Make sure your loan officer takes these into consideration.

Keep in mind that everyone has three different FICO scores. Which one will your loan officer choose? It's a critical question if you are on the edge of qualifying for a conventional Fannie/Freddie loan.

Sjoblad said a lot of lenders choose the middle score, but some just pick the lowest of the three. Obviously, that's not a lender you want to work with, so be sure to know your scores and ask the loan officer which one he or she plans to use.

It just makes matters worse for borrowers that people with weaker credit histories often feel grateful to get any mortgage at all. Unscrupulous loan officers and mortgage brokers take full advantage of that worry and gratitude to push borrowers into higher-priced loans. You don't have to be so grateful. "They should push as hard as prime customers push," Larsen said. "The truth is, the lender wants to make the loan. They're able to make a profit on that. There is no penalty for being demanding and for asking tough questions."

If you know your FICO scores, you can use the MyFICO Web site to look up the mortgage interest rates and terms that local lenders are offering metro-area borrowers who have credit scores similar to yours. There's no need to limit your shopping to the lenders that show up on that site, but it's a great way to learn what kind of rate quotes you should expect to hear from lenders.

Overall Credit Rehab

Maybe you need more than a few months of clean living to get your credit situation back on track. The Silver Spring-based National Foundation for Credit Counseling offers several signs of early-stage credit trouble. These include being near the limit of your lines of credit, being able to make only minimum payments on credit cards and having credit card payments take up more than 15 percent of your take-home pay.

Credit has probably gone from problem to crisis if you're spending 20 percent or more of your take-home pay on debt, skipping some bill payments to meet others or getting phone calls from bill collectors. In these situations, you can benefit from free budgeting help from certified credit counselors.

You don't have to turn to the high-pressure folks who advertise on TV, leave phone messages on your answering machine or place pop-up ads on the Web pages you visit. Often these firms are simply interested in setting you up as quickly as possible with a very profitable (to them) home-equity loan to replace your unsecured credit cards, or an expensive debt-management program, which is a negotiated agreement they reach with your credit card companies in which they agree to lower your interest rate while the credit counseling organization manages your payments to each creditor.

Though such operations usually stress that they're nonprofit organizations, that doesn't necessarily mean their cure won't be expensive to you. You need to choose your credit counselor carefully, or you could wind up further in debt.

A report from the Senate's permanent subcommittee on investigations this spring said some of the new entrants to the traditional nonprofit credit counseling industry were generating complaints about excessive fees, nonexistent education and poor customer service. Though many billed themselves as nonprofit groups, the subcommittee found that some funneled work to for-profit affiliates.

"The primary effect of the for-profit model has been to corrupt the original purpose of the credit counseling industry -- to provide advice, counseling and education to indebted consumers free of charge or at minimal charge, and place consumers on debt management programs only if they are otherwise unable to pay their debts. Some of the new entrants now practice the reverse -- provide no bona-fide education or counseling and place every consumer onto a debt management program at unreasonable or exorbitant charge," the subcommittee report said.

One of the prime tip-offs that you are dealing with hucksters is that they approach you first, offering help with your debts. Another is that they give short shrift to the hard work of budgeting and counseling and instead start talking about how they can get creditors to lower your rates and stop calling you. Another bad sign is that they base their fees on a percentage of your outstanding debt; some of the worst offenders have even taken the borrowers' first month of payments as a fee -- even though the borrowers thought the money was going to pay off their credit card balances.

Locally, you can get free, face-to-face credit counseling and budgeting help through the long-established Consumer Credit Counseling Service of Greater Washington. And, if you decide you need it, the service can set you up with a low-cost debt-management program. Call 800-747-4222 to make an appointment for counseling at one of the 11 offices in the District, Maryland and Virginia. It also will do consultations over the phone, or online through the Web site www.cccswdc.org. They don't do direct mail or phone soliciting, so if you want help from the service, you will have to take the initiative.

The service will counsel you regardless of your income or debt level, and you don't even need to be at a crisis point to get a little budgeting help. The organization is supported mainly by voluntary fees by credit companies and by the fees paid by borrowers who choose to enter a debt-management program.

About one-third of the people who come to Consumer Credit Counseling Service decide to enroll in a debt-management program, often as an alternative to declaring bankruptcy, according to Rosemary Hill, a senior certified credit counselor. These plans can help you pay off unsecured debt, such as credit card balances, finance company loans, medical bills or old bills from utility companies with which you no longer do business. In such a plan, the counseling service negotiates a lower interest rate from the creditors. The borrower agrees to a plan for paying back principal and interest on a specific timetable. Borrowers pay the counseling service a lump sum each month, and the service sees to it that each creditor gets its fair share in a timely manner. The typical administrative fee a borrower pays to the counseling service is $20 per month; in the District and Maryland (but not Virginia), consumers also are asked for a one-time fee of $50 to establish the plan. Beyond that, all the money you submit pays off your bills.

It takes about five years, on average, to pay off your debts through such a program. During those years, however, you're expected to give up using credit cards. And future creditors may still be wary despite all your hard work in the program. But it will get the creditors off your back; in most cases the collection companies take you off their calling list.