More Tips on Raising (and Keeping) Your Score High

* Use credit cards for everyday purchases — then pay your credit cards in full every month.   By regularly using your credit cards (and paying them on time), you help build credit history, and this helps increase your credit score. 

Keep in mind that debit card transactions do not usually appear on credit reports. 

* Pay down as much of your debt as possible. The lower your ratio of “current debt to available credit” limits the higher your credit score will be and the better you’ll look  to a lender. Word of warning here, though: Do NOT open additional credit card accounts to increase this ratio, since that may hurt your credit.

* Don't be afraid of credit counseling. If you're seriously behind on payments or are simply overloaded with too many debts, you may want to consider working with a non-profit agencies found at www.nfcc.org and www.aiccca.org. These services can negotiate lower interest rates and help you pay off your bills within a few years and, despite what you might think, they shouldn’t hurt your credit score.

Any and all references to credit counseling will be removed from a credit report after you’ve paid off your debts. So, no lasting reminders for you and future creditors.

For 5 quick tips on what to AVOID in a credit counselor, click here.

* AVOID BANKRUPTCY! This is obvious, but you need to know that bankruptcy can knock 200 points, or more, off of your credit score!  Once a score is pushed below 620, which bankruptcy inevitably does, a loan becomes much more expensive.  Not only that, but a bankruptcy will stay on your record for up to TEN years.  Avoid this at all costs!

* Don’t unnecessarily close accounts. A closed account will still show up on your credit report, and its history will be considered by your credit score.

Avoiding (and Correcting) Identity Theft

Even if you mind all your “P’s and Q’s” and your credit is truly stellar (and even if it’s not), it’s not uncommon for credit reports to have errors that have nothing to do with your true payment history. Some lenders estimate that as many as 80 percent of all credit reports contain some kind of inaccurate information.

How? Sometimes the credit report contains information about someone else, possibly with the same, or similar, name.  Or it could also be because someone “stole” your identity — Social Security number and all.

Identity theft is a growing problem and yet another reason you should check your credit report to make sure that you aren't taking the rap for someone who has snatched your credit card number and made charges on it.

Nothing is more frustrating than getting to a zero balance on a credit card account, then getting billed for more charges that you didn't make. Clear that up with the credit card company right away, and you won't have to pay anything when you prove that the charges are not yours — but you want to make sure it doesn't haunt you on a credit report. For more information on preventing identity theft, go to www.privacyrights.org.

As if you need it, here's another good reason to winnow down the number of credit cards in your name. Don't carry around credit cards that you rarely use. Also…if you want to use an ATM machine, pick a personal identification number (PIN) that isn't an obvious set of digits, such as your birthday, that someone could find in your wallet. A PIN should reflect numbers that mean nothing to anyone but you — the date you fell in love with your high school sweetheart or something.

Make ALL Lenders Aware of Incorrect Items If you're sitting in front of a loan officer to discuss a car or mortgage loan and you have a bad credit report due to a mistake, tell this person about the problem before you even begin to talk about the loan. Few reports are read by humans now; they're handled almost completely by computers, and computers can't interpret. So, the burden falls upon you to show the loan officer exactly what went wrong and why the information is incorrect.

MyFICO's report comes with a form to fill out if your bad credit rating is attributed to an account that isn't yours or a disputed amount. You should also contact the credit company that put the mistake up there and get them to correct it. If they don't correct it within 60 days, or if they disagree with you and won't change it, you have the right to put in an addendum of 100 words saying why that piece of information is incorrect.

The process takes time, because the creditors have 30 days to respond to a charge of a discrepancy. As long as a charge is in dispute, that dispute will still show up on your report.

For more information on the dangers identity theft, read 5 Simple Steps to Protect Your Identity and Report Identity Theft Quickly to Minimize Damage.