Improve your Credit Score

When it comes to repairing your credit, you're the best person for the job. What should you do if you have bad credit? Here are tips that are designed to improve your credit history and raise your credit score:

1. Pull a copy of your credit history from AnnualCreditReport.com. Sponsored by the three credit-reporting bureaus, Equifax, Experian and TransUnion, AnnualCreditReport.com is the only place you can go to get a free copy of your credit history. Each credit-reporting bureau is required to give you one copy once a year. You should pull copies from each of the bureaus, since they sometimes collect different data.

2. While you're there, buy a copy of your credit score from Equifax.com. Equifax offers a FICO score, also known as a Beacon score, which is from Fair Isaac, the company that created the concept of credit scoring. Most creditors will pull a FICO score, so you should see what they're seeing. Your credit score will give you a snapshot of what your credit information means to your creditors. An enhanced credit scoring system, FICO 08, will be rolled out by late spring of 2008.

3. Check your credit history thoroughly. You're looking for errors, misinformation and negative information that might count against you. File a dispute with the three credit-reporting bureaus if you spot any errors.

4. Understand what kind of debt you're facing. Make a list of everything you owe, the interest rate each debt carries, and the minimum payment due each month. Then prioritize your debt: mortgage, real estate taxes, credit cards and medical bills should be paid in that order.

5. Negotiate with your creditors for a lower interest rate. Paying less in interest means more of your payment each month goes toward paying down your balance.

6. Pay down the debt with the highest interest rate first. Pay your mortgage and home equity loan and lines of credit in full each month. Then, make sure you have enough cash to make all of the minimum payments due on your debt each month.

7. Pay everything on time, even if you can make only the minimum payment. The most crucial component of your credit history and credit score is your ability to pay your bills on time each month. Paying on time shows your creditors that you take your debts and obligations seriously.

8. Don't charge more than 25 percent of your maximum available credit limit. If you carry a credit-card balance that is a higher percentage of your available credit limit, your credit score will go down.

9. Don't open and close a lot of accounts. It assesses how risky a borrower you are today.

Consult your financial advisor to see what is best for you.