How's Your Credit Report Looking These Days?

Credit - it is the financial equivalent of your good name. A good score is your ticket to a home, car, a credit card, and nowadays even an insurance policy, cell phone, and possibly employment! It's good to know that tiny slip-ups that can come back to haunt you, so be diligent and disciplined in your bill-paying.

The credit crunch is not only affecting the mortgage markets, but other markets as well. Consider credit card companies, who are now writing off record levels of debt. A year ago if your score was 720 they would be happy to oblige you with a card. Now if you have a 740 or 750 you can get an account, but you won't typically have the lowest rates, says Bill Hardekopf, of LowCards.com.

You are entitled to a a free copy of your credit report annually from http://annualcreditreport.com/ from each of the 3 bureaus: Equifax, Experian, and TransUnion. Your report is given to you, but if you want your score you have to pay between $6-8.

Go through your report with a fine-tooth comb and if you find errors file a dispute immediately, as it will take about 30-45 days to the bureaus to start the process of investigating any errors in your report. You have to be persistent and stay on top of things to be sure they are working on your behalf, and remember that big issues that are in error (collection accounts, for instance) could cost you 100 points or more on your credit score.

Dates: make sure dates are accurate, generally collection accounts are reported for 7 years from when you first fell behind. Bankruptcies may be reported for up to 10 years, and liens may stay on your record until paid. Also watch for someone else's record that may show in your file and paid-in-full accounts that are still present.

Be sure that you are not maxing out your credit cards. It looks better when there is still credit to be used on those accounts. If you are maxed out or close to it and have a good payment history, ask your carrier to increase your limit. Or, pay down the balance so you are using less of your limit.

Don't apply for cards you don't need. People have got the advice to go open a bunch of cards to establish your credit in the hopes that this is a good thing. Baloney! Each time you apply for a new card, there is a ding on your credit. Enough dings will make a dent, especially if you have a short credit history. Take credit only when you need it.

Lastly, pay your card in full each month, if possible, or at least the minimum payment, and be sure those payments are on time. Falling behind on your payment can trigger additional fees and an interest rate increase, and if other lenders see that, they may raise your rate as well, which could put you behind further, starting the vicious downward spiral of credit-card debt.