Having worked in the mortgage and banking industry for many years I know all to well how important ones' credit is and how your credit score can help you or hurt you. I am going to try to explain credit as if you know nothing about it, so I apologize for any redundancy. I will share with you what kind of factors influence your credit score as well as ways that you can improve your credit score.

There are three major credit bureaus: Equifax, transunion, and Experian. These Credit bureaus track everytime you apply for credit, your employment history (which is ususally not up to date), your social security number, name, date of birth, your physical address, any judgments or liens (i.e, breaking a lease or back child support) and they also compile a list of all of your credit accounts, what they often refer to as "tradelines". The lenders on these credit accounts report to the credit bureaus; the type of account (bankcard, auto loan, mortgage, etc), When you opened the account, your credit limit or loan amount, the account balance and your payment history.

Some commom misconceptions I have heard from people is that they think their credit report lists asset information such as their checking accounts or brokerage accounts. Your credit report also does not list information regarding your rent, utitlies (usually) or cell phone bills. Generally it only lists items with a balance that you make payments on, not ones that you pay off every month.

Here is a list of a few things that negatively affects your credit:

1. Payment History & Adverse public records (bankruptcy, judgements, suits, liens, collection items, and/or delinquencies.
2. High Credit Balances
3. Only having a short credit history
4. Applying for credit to often
5. The mix of credit you use (for instance all credit cards)

Your payment history is the number one thing that affect your credit! Late payments on your mortgage in the last calendar year can sometimes be an immediate disqualification for a home loan. I have unfortunately been the one that has had to tell people that they did not qualify for a certain type of loan due to their credit score or payment history. Sometimes it was only 1 point away from the credit score that they needed to qualify. This is why it is so important to understand what affects your credit.

When I was younger I thought I was going to do something really smart and I was going to pay off all of my credit cards and cancel them all and that this would definitely improve my credit score. I was very disappointed when my credit became worse. I was outraged, I decided at that point I was going to fix my credit score and hear is what I did.

1. You need to know what is on your credit report. You can get a free copy of your credit report once a year at www.annualcreditreport.com. It doesn't come with the credit score... you have to pay extra for that, but if you don't know what your credit is I suggest paying the extra to know where you are starting from so you can measure your improvement. Make sure you get your credit report from each credit bureau, this is very important as they don't always have the same information. You will also be able to dispute inacurate information that is on your credit report... which leads me to the next step.
   
2. Dispute!!!. You would be surprised at how many inaccuracies may be out there on your credit report. Companies sometimes change account numbers so an account may be reporting twice on your report. They may have mistakenly reported that you were late on a payment. I have seen many times that someone has an account on their credit report that they know nothing about. Their is a process for disputing potentially innacurate information. Follow the dispute process for all of your accounts that have innacuracies.
   
3. Manage your bills better. If your bank has online bill pay, use it. Set up recurring payments for the accounts that you can. One important thing if you are struglling to make payments, pay your mortgage first and pay at least ten dollars to each of the creditors and work with them to catch up.
   
4. Do not close all of your credit accounts! Learn from my mistake. The credit bureaus like to see that you have a long history and good payment history with different lenders.
   
5. Do not apply for credit to often. To have a valid credit score you generally need three tradelines. If you apply for every "10% off your purchase" offer on a store card or every credit card that comes in the mail, this can negatively impact your score.
   
6. Stay away from collections!!! A collection will generally stay on your credit report for 7 years, even after you have paid it off. (Bankruptcies stay on for ten years) Medical collections pop up on peoples credit all the time so pay attention to those medical bills that you can't tell whethet it is a bill or not... yeah those ones. Make sure it says somewhere on the sheet "This is not a bill".

These are just a few tips that can help you improve your credit. It does take time to improve your credit score, but with a little persistence you can eventually have an excellent (720+)credit score. This will allow you to more easily qualify for all types of loans as well as save money by getting more favourable financing options.

I hope this helps!!!

Kevin