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The Federal Trade Commission explains your rights to access consumer reporting information that affects your credit score. You can access your credit report for free from each of the 3 credit bureaus once a year. The best way to use this to your advantage is to pull one credit report every 4 months from one of the credit bureaus: Equifax, TransUnion, or Experian. By the end of a year you will have used your 3 allotments. The only official website designated for this purpose is www.annualcreditreport.com.

If there is information on a credit report that has been reported inaccurately, then you can write that credit bureau and explain why it is not accurate. Send copies of documentation that show why the information is incorrect.

If a company denies you credit, insurance, or employment, you are entitled under federal law to ask for a copy of the credit report they pulled on you. You have 60 days to make this request in writing. The denial notice that you receive should include the name, address, and phone number of the credit bureau to contact.

Your credit score is not included with your credit report. The credit report shows factors that affect your credit score, but not that actual credit score. You will have to pay for your credit score separately. You can order that from any of the 3 credit bureaus. You can also use a FICO score estimator that is available from Bankrate, Inc and myFico.

Your credit score is a number that is also referred to as your FICO score. This gives lenders the ability to assess how likely your are to pay back a loan on time. The higher your credit score, the less risk they assume, and the better loan rate you receive.

Companies report your payment history to 3 major credit bureaus: Experian, Equifax and TransUnion. They may not all have the same information so your credit score may vary slightly depending on which bureau your credit score is pulled from. They report on your payment history, the length of your credit history, the amounts you owe, and the types of credit you have.

Credit scores can range from a low of 300 to a perfect score of 850. These are the levels of risk and FICO scales that are commonly used to determine what kind of loan you can get and the cost of that loan.

760 - 850 Excellent, lowest rates

700 - 759 Very Good, relatively low rates

680 - 699 Acceptable, normal loan rates

620 - 679 Uncertain, higher rates

Below 620 High Risk, highest rates

Many lenders use 620 as a base number since anything less is considered high risk. Do the best you can to get your credit score above 620 before seeking a new loan.

Your credit score is evaluated based on these 5 categories:

• Payment history - 35%
• Total amounts owed - 30%
• Length of credit history - 15%
• New credit - 10%
• Types of credit used - 10%

Here are some tips to raise your credit score based on the 5 main categories that are used above.

Pay your bills on time

Your recent payment history is considered as more important than what happened four to seven years ago so it is important to start a habit of paying your bills on time and stick with it. What is considered as late payment? When you wait to pay bills for 30 days or more companies can report you to the credit bureaus for late payment and this negative information can remain on your credit history for seven years.

One step you can take is to set up a personal budget to make sure you alot enough of your income to pay your bills each month. Another step is to set up automatic payment for as many of your bills as your can such as your rent, utilities, phone bill, etc. That way you don’t have to worry about whether you are late or not each month. If you have medical bills, negotiate a repayment schedule that works for you and pay that down on time.

Lower the amount owed on credit cards

Credit cards are not free money. You have to pay it back so don’t run up large credit card bills. That has a very negative impact on your credit score. Credit card companies report the amount you owe each month and it does not reflect favorably on your credit score when your credit cards are maxed out to their limit. Work at paying down your credit card balances so you are only using a portion of your credit limit. This will increase your credit score.

Applying for multiple credit cards at once to increase your credit limit will have a negative impact on your credit score. It is better to do without and pay down existing credit cards. Remember the addage: Use it up, wear it out, make it do or do without!

Keep old credit card accounts open

When you pay a credit card down and don’t want to use it anymore, it will help your credit score to leave that account open. Just put that card away in a secure place. This old account will add to your lenght of credit history and improve your credit score.

Only open new accounts that you need

In department stores, you are often asked if you want to open a credit account for their store. As an incentive they may offer you a discount. Remember that too many new accounts can hurt your credit score. Keep the number of cards that you use to a manageable minimum. Tell the clerk, “No thank you, I am protecting my credit score!”

Manage the accounts you have well

Show that you can manage the credit cards and loans that you have responsibly. That is what creditors want to see when they are looking at your ability to pay a home or car loan.