In the new millennium, your credit score may be the single most important piece of information you own.

That’s because lenders will soon start to use your credit score to further break down the categories of home buyers and homeowners. For example, if you’re a Grade A borrower, as 90 percent of home buyers and owners are, you get the best rates and terms.

But lenders are now able, through analyzing someone’s credit history, to see if you’re at the top of the class, or if you barely squeezed into the A category. And, they will change the interest rate and terms you’re offered on your loan, or credit card, accordingly.

Already, several lenders involved with are using credit scores to offer “perfect” borrowers loan terms that are unavailable even to other so-called Grade A borrowers.

Since credit scores are based on your credit history, you need to be extra vigilant when it comes to making sure your credit truly reflects who you are financially.

Here are some things you can do that will help:

1.Take stock of your current credit situation.
Start by ordering a copy of your credit report from each of the three national credit reporting bureaus, Experian (888-EXPERIAN or, Equifax (800-685-1111 or or Trans-Union (800-888-4213 or

2.Scrutinize your credit report. Check for errors and inconsistencies. If someone else’s debt or payment problems have been posted to your account, dispute it with each of the credit reporting bureaus. The Federal Trade Commission requires the credit reporting bureaus to launch an investigation of the item in dispute and resolve it within 30 days. If you’re listed as delinquent on several accounts, and you know you are current, provide copies of recent statements and canceled checks as proof.

3.Fix your credit history errors. Write letters (and send them certified mail, return receipt requested) to your creditors and send letters to the credit reporting bureaus. Enclose documentation that supports your claims. To receive a brochure and sample letter on how to dispute faulty credit bureau information, write to the Federal Trade Commission, correspondence Branch, Washington, DC 20580 (or online at The process of fixing your errors can take months, despite the fact credit bureaus are required to deal with your dispute within 30 days.

4.Pay off your debt. One of the fastest ways to fix your credit is to pay off, or pay down, your debt as quickly as possible.

5.Stop spending more than you earn. The quickest way to fix your credit problems is to stop using your credit cards. Plan a budget that allows you to save at least $100 to $200 each month, which you can then apply toward your credit card debt. While it may be painful for awhile, you can learn to live on less. Cut up or freeze your credit cards. If you make your cards more difficult to use, you will be less likely to succumb to temptation.

6.Cancel your unused cards. Remember that too much available credit can sink your credit history. Open up your wallet. How many credit cards do you have? If you have 5 or 6 and each card has a credit limit of $10,000 to $15,000- that’s $50,000 to $75,000 in unused credit. Credit bureaus look at your untapped spending limits and wonder when you’re going to lose control. So a hoard of unused cards bearing high limits turns into a negative. Cancel your unused accounts in writing, and then ask the company to send you a confirmation that the account has been canceled. Several months after receiving a confirmation, check to be sure the accounts have been closed, and not just labeled “inactive.”

  1. Know when you need professional help. You can fix your credit on your own, but if you just can’t get a workable budget together, you may need outside guidance. Check out the nonprofit Consumer Credit Counseling Services (CCCS) which has hundreds of offices all over the U.S., and offers free, or very low-cost credit, debt, and budget counseling services (800-338-2227). If you want CCCS or another non-profit credit counseling service to consolidate and pay your bills, they can. But beware: That service will be reported on your credit history and will be considered a negative piece of information.

8.Beware of credit repair companies. If someone offers to fix your credit for free, run the other way. No one can “erase” your bad credit or create a whole new credit identity for you. These are most likely fraudulent credit repair companies and you should call your nearest Federal Trade Commission office to report it. Only you can fix your own credit, and it takes months, if not years. No one else can do it for you.

9.Make sure your workout payments are correctly reported. After going through the hassle of setting up a workout schedule with a creditor, you don’t want that creditor to report that you’re not making the required payment.

10.Get a secured credit card. Whether you’ve been through bankruptcy or have had to cancel all of your credit accounts, start the rebuilding process with a secured credit card. You put an amount of money in a bank, like $1,000, and you get a credit card that allows you to “borrow” against the amount deposited. Unlike a debit card, which works like a checking account, a secured credit card does aid you in rebuilding your credit.

11.Consolidate your debt, if you can. If you consolidate your debts with a home equity loan, you may be able to use tax-deductible cash with a lower interest rate to pay off high-interest-rate, non-deductible loans. Transferring balances to cards with super-low introductory rates would allow you to put more cash toward paying down your balance. If you can’t keep a lid on your spending, you may be putting your home at risk. So think through your budget before you borrow against your home.

Oct. 17, 2003.