Know Your Score

In general, the higher the score, the better your application for credit will look to a lender. Of course, lenders will also review your income level and employment history when making their decisions.

For years, these credit scores were shrouded in mystery. Now, you can get your credit score, the number from 0 to 800 that records a snapshot of your credit rating, with just a few strokes of your keyboard and a nominal charge.

To start, log onto www.myfico.com. This address takes you to the web site of Fair Isaac Corporation, the credit scoring system that's most frequently used. You will be charged a fee to access your score online. The site provides information on credit scoring, a sample credit score report, a glossary and a list of frequently asked questions.

Before obtaining your score, you'll need to register by providing personal information. Then, you'll be asked questions that will verify your identity. You'll then create a password-protected profile and choose a method of payment.

Once you've completed these steps, you'll see your credit score, along with information on the factors that are affecting your score most.

Overall, the factors that affect credit scores are payment history, debt, length of credit history, amount of new credit and credit mix. Payment history is the most heavily weighted factor. People with lower scores (from 0 to 499) are most likely, statistically, to default on loans, file for bankruptcy or make very late payments on debt. The amount of debt you carry is the second most-heavily weighted factor.

Remember that your credit score is a current snapshot of your credit history. This score can change gradually over time. Past credit problems will have a lower impact on your score as time passes.

Along with your credit score report, FICO offers tips on paying off debts with high balances quickly and steps to building a good credit history. Some tips are common sense: You should pay your bills on time, keep the balances owed as low as possible and try to limit the number of credit applications you make.

If you're planning to purchase a home, you should discuss your credit score with your lender. He or she may have more tips for improving your credit score, repairing a bad credit rating and increasing your home purchasing power. We can recommend loan officers for you to work with, just give us a call.

Getting Your Credit Back In Shape

First, make sure the report is accurate. Is your Social Security number and date of birth correct? How about your name and address? You don't want to take the fall for someone else's credit mistakes. If you find a discrepancy, report it to the credit agency.

Now is the time to pay your bills on time, and in full, paying careful attention to your rent check and mortgage payment. Staying put at your current address looks good, too.

Close any open credit accounts with a zero balance. If you haven't used a card, ditch the account.

Limit the number of credit accounts you use, perhaps to just one major bank card, a gasoline card and one department store. Pay all of these bills on time and in full. (Remember, just because you have these cards doesn't mean you need to use them often.)

Be wary of anyone who advertises quick fixes for your bad credit. You can accomplish the same objective, for free, over time.