• Pay your bills on time. Some creditors will notify one or more of the major credit reporting agencies (Equifax, Experian and Trans Union) when individuals are late in paying their bills. (This, of course, harms your credit rating.) In addition, certain creditors, such as credit card companies, will charge you a substantial late fee ($29 or more) when you do not pay your bill on time. Of course, when paying your bills by check, make sure that you have sufficient funds in your checking account at the time you pay your bill. Banks are now cashing checks faster than ever before and a “bounced” check will pull down your credit rating.
• If you don’t have a credit card, obtain a “secured” credit card. Many banks offer this type of credit card for individuals looking to establish credit, or improve their credit rating. By depositing a specified amount of money with the bank or credit card company, you can obtain a credit card that has a credit limit equal to the amount of your deposit. (Caution: Be sure to deal with a reputable bank or credit card company, since some credit card providers try to take advantage of individuals seeking secured credit cards.)
• Work with a credit counseling agency. If your debt load is great, a credit counselor can help you consolidate your debt (if appropriate for you), reduce your debt and learn how to stay out of financial trouble in the future. Best of all, their services may be provided either at no cost, or for a very low cost. The National Foundation for Credit Counseling (www.DebtAdvice.org) is one agency that can help—although there are many other reputable agencies as well. Many of these agencies can negotiate a payment schedule with your creditors. This can help to reduce or even eliminate the number of phone calls you receive from creditors. As with the credit card companies, make sure you are dealing with a reputable credit counseling agency.

Improving your credit history is not easy, but it’s vital if you wish to apply for:

• financing (purchasing a house or a car, for example);
• employment (many employers consider prospective employees’ credit records); and
• insurance (homeowners’, car and life insurance can be more difficult to obtain with an unfavorable credit history).