Master Your Card

Pay your bills on time – This is the single most important factor in determining your credit rating. Roughly 35% of your Fico score will be determined by your payment history, so any late payments, collections, charge-offs, bankruptcies or liens will bruise your rating pretty significantly. The good news is that the further back in time you go, the less of an impact on your score.

Pay down your debts – It sounds obvious because it is. If you were lending money to someone, the first thing you would look at is how much debt they’re currently carrying. 30% of your Fico score is determined by your utilization. Divide your total balance by your total credit limit and you’ll have your utilization.

Don’t close old accounts – Assuming that keeping an account open isn’t costing you anything (beyond a modest annual fee), leave it be. Why? Closing down an account lowers your total credit limit, and makes it seem like your total credit utilization is higher. Pulling the plug on your more elderly accounts can also shorten your reported credit history, making you seem like more of a risk to potential lenders.

Get rid of questionable accounts – Having said that, some accounts are better off dead. Many retail or gas cards can make you seem like more of a credit risk, particularly if they’re from no-name, relatively obscure companies. As a general rule, if you’re too embarrassed to admit you have it, scrap it.

Get copies of your credit report – By law, you’re entitled to one free credit report every 12 months from each of the big 3 agencies – Experian, Transunion and Equifax – from AnnualCreditReport.com. You might even want to consider paying for a service that allows you to check your score on a more regular basis. Personally, I recommend one of the myFico plans – make sure you check out this thread for the latest discount codes!

Dispute any and all items you think are inaccurate – Mistakes happen, so it really is worth going over your credit reports with a fine toothed comb. You’re looking for errors that could be negatively impacting your score, like accounts that aren’t yours, late payments that were actually paid on time, debts that shouldn’t be showing up anymore (negative entries should be deleted after 7 years, though bankruptcies can stick around for up to a decade) and debts that you’ve paid off but are still showing as outstanding.

The quickest method for filing a dispute is online - here are links to the Big 3’s dispute forms:

• Experian
• Transunion
• Equifax

Note that it does NOT impact your credit score when you make a dispute.

The remaining 9 tips will be up for your perusal tomorrow!