Action Plan to Improve Your Credit Score

From Wallet Pop Financial Web Page:

Your credit score impacts your ability to get out of debt and stay out of debt. The worse your credit score, the higher the interest rate you will be charged on money you borrow. The better your score, the less your debt will cost you and the quicker you'll be able to pay it off.

Step 1: Get Your Credit Report and Check it For Errors
Under the Fair Credit Reporting Act, the Big Three credit bureaus are required to provide every consumer who asks with a free copy of their credit report once a year. You can get yours by going to annualcreditreport.com. This step is important because it is extremely likely there are errors.

Step 2: Automate Your Bill Paying.

This may be the most important tip. Missing payments or being late on payments can quickly ruin your credit score. For this reason, I strongly recommend that you use your bank's online bill-paying service to automatically transfer a pre-set amount every month from your checking account to cover at least the minimum payments on all your credit accounts

Step 3: If You Have Missed Payments, Get Current.

Step 4: Keep Your Balance Well Below Your Credit Limit.

Of all the factors you can control -- and improve quickly -- how much you owe is probably the most powerful. Since the credit crunch, credit card companies have been cutting customers' credit limits without warning.This can be devastating to your credit score

Step 5: Beware the Credit Card Transfer Game.

For years, people have saved money by transferring high-interest credit card balances to low-interest cards.This can still be helpful, but be aware that using one credit line to pay off another sets off credit score alarm bells -- even if all you're doing is consolidating your accounts. All other things being equal, your credit score will be higher if you have a bunch of small balances on a number of different cards rather than a big balance on just one or two.

Step 6: If You Rack up High Balances, Pay Your Card Bill Early.

Step 7: Hang On To Your Old Accounts

Part of your credit score is based on how long you have had credit accounts. Closing old accounts shortens your credit history and reduces your total credit -- neither of which is good for your credit score. Keep the older accounts open even if you aren't using them.

Step 8: Know the Difference Between a "Soft Inquiry" and a "Hard Inquiry."

The credit bureaus all recognize the difference between you checking your own score (a "soft inquiry") and lenders checking your score (a "hard inquiry"). While too many hard inquiries can lower your score, soft inquiries don't count at all. Feel free to check your score as often as you want.

Step 9: Buy a 3-and-1 Report And a Credit-Monitoring Package and Identity Theft Service.

Your credit score and credit report are so important that it makes sense to pay for a 3-and-1 Report (which provides you with your credit scores from the three bureaus) as well as an identity theft monitoring service. In most cases, these services will cost you between $11.95 and $19.95 a month.