What Steps Can You Take to Improve Your Credit?

Build a Solid Payment History—

• Pay all of your bills on time, even if it's just the minimum payment. Make sure that you send in the full payment due every month, and that your payment reaches the company before the due date.
• Remember that all payments are important. Your credit report may include missed payments to various creditors such as your phone or electric companies or a debt buyer. Also, bankruptcy filings, failure to pay chilld support or civil suits can show up in the "public records" section of your report and hurt your credit.

Don't Max Out Your Accounts—Don't use up too much of the credit available to you. If you get an increase in your credit line, don't spend it all at once—It is also good to have more credit available in case of emergencies.

Show a Long Credit History—Keep your card accounts open, even if you pay a card off in full. This can help reduce your debt-to-credit ratio. It can also help you to maintain a relationship with your lender and possibly qualify you for better credit terms if the lender knows you have been a good customer. Your credit score takes into account the length of time your accounts have been open. You want to show a long history of borrowing and paying back money reliably.

Only Apply For Credit You Need—Don't take out or apply for too many loans at once. It can make you look desperate for money—not a good sign to lenders.

Don't Take Out Too Many Types of Loans—Don't take out new department store credit cards just because they are offering you a discount. It's generally better to carry only a small number of cards at once, and not apply for credit you don't need. Plus it is easier to keep track of your payments with fewer cards.

Protecting Your Credit and Your Identity

Your credit is your responsibility and you have the power to protect it. In addition to having good payment habits, you also need to make sure that your credit report is accurate and to be on the lookout for Identity Theft.

Monitor Your Credit Report for Accuracy

• Check your credit reports at least 3-4 times a year. Make sure that all the information is accurate and up-to-date.
• Know your rights. You are entitled to one free credit report each year from each major national credit bureau, and also whenever you're denied employment, credit or a loan based on a negative credit profile.
• Quickly dispute charges that are inaccurate. Don't wait until you are applying for a new loan to do this. It takes time for disputes to make their way through the system, so take care of problems as soon as you spot them.

Watch Out for Identity Theft

• There are many reports now about "Identity Theft" and how that can harm your credit. Identity theft is when someone steals your personal information. Sometimes, the thieves can use this information to open financial accounts or make purchases. To combat identity theft, remember: Prevent, Detect, Act.
• Prevent. Shred or tear up mail with your personal information on it (including credit card numbers and social security numbers) before throwing in the trash. If you lose your wallet, credit cards or checkbook, contact your banks or lenders immediately.
• Detect. Monitor your credit report and even your account statements.
• Act. If you think someone has used your personal information, contact the 3 major national credit reporting agencies (TransUnion, Experian and Equifax) immediately and have a "fraud alert" placed on your credit file. File a local police report so you have evidence of the identity theft.

Building Good Credit Doesn't Happen Overnight.

It takes time and effort. But the benefits of a good score—the money saved, the confidence you'll have when you begin shopping around for home and auto loans—make it all worthwhile.