Q. My credit history is poor, to say the least. (My score is 516.) I have a bankruptcy that was discharged in 2004, a history of late student loan payments and a $400 cell phone bill that went into collection. But I have paid my $30K student loan for the last three years without fault. I also have one credit card with a $2,000 limit that I've paid steadily since I opened it two years ago. I've been employed at the same place for three years and my salary was just raised to a little over $100K a year. What are my chances of being able to buy a $350,000-$450,000 house by the middle of next year?

A. We wish we could be more encouraging, but we have several concerns.

First, you'll never get a mortgage with a credit score of 516. You've got to boost your score to at least 620 before you have a serious shot at a loan. Even then, you'll have to pay a higher interest rate than borrowers with good credit until your score is at least 700 or 720, depending on the lender.

Keeping up with your student loans and settling that old cell phone bill would be a good start. It's just $400, for heaven's sake!

The bankruptcy will remain on your credit reports for seven years, and you'll need a spotless record of paying your bills, and paying your bills on time, to rebuild your credit score.

Our 7 smart moves to improve your credit score will tell you what to do.

Then you need to consider whether you can afford a $350,000-$450,000 house on your income. Almost every yardstick we know of says you can't.

The old rule of thumb -- that you shouldn't borrow more than 2 1/2 times your income -- suggests a maximum mortgage of about $250,000.

If you've got $100,000 to $150,000 for a down payment, you're good to try for the more expensive house. If not, you'll wind up with mortgage payments that will consume way too much of your income.

So many people are struggling to meet their monthly payments these days, you don't want to become one of them.

Use our report on how much house you can afford to help you make the right decisions. It includes a calculator that will give you a good estimate based on your financial situation.