Next to annual income, few numbers are as important for financial freedom as one’s credit score. FICO scores range between 300 for bad credit to 850 for excellent credit, and to get the very best terms on mortgages, loans, and credit cards, it’s best to have a FICO score above 760.

Improving and maintaining a credit score in that range isn’t rocket science, but it’s important to stay on top of the factors that influence credit scores. To test your credit score savvy, take this quick Credit Score Quiz.

True or False?

1. You don’t have to worry about your credit score, unless you’re planning to take out a mortgage or car loan or apply for a credit card or other type of credit.
2. You don’t have to have a lot of money to get a good credit score.
3. It takes a long time to build a credit history.
4. Having lots of credit cards is bad for your credit score.
5. Having debt pulls down your credit score.
6. Missing a credit card payment once in a while is okay as long as you continue to pay next month.
7. It takes a long time to improve your credit score
8. It takes 5 to 7 years to clear up bad marks on your credit report.

Answers:
1. You don’t have to worry about your credit score, unless you’re planning to take out a mortgage or car loan, or apply for a credit card or other type of credit.

False. Your credit score doesn’t just determine the interest rates paid on mortgages and other types of loans, but also how much you’ll pay in insurance on your car or home. Further, most prospective landlords pull a copy of a person’s credit report, so people with bad credit may find it difficult to find a nice place to live. In addition, most employers screen applicants by looking at their credit score.

2. You don’t have to have a lot of money to get a good credit score.

True. Unlike applications for mortgages and other loans, credit ratings are not based on a person’s income. Someone with a low income can easily develop excellent credit and get access to the best terms for loans and other credit products. It is simply a matter of paying bills on time, not keeping high balances on credit cards, and over time, building a varied credit history that show that you can handle credit responsibly. Of course, people with limited income may find it more difficult to stay out of credit card debt and other types of debt, and excessive debt levels will lower credit scroes.

3. You can build a credit history quickly.

True. These days all credit reporting is computerized, so you can build a basic credit history in as little as 6 to 12 months. People without any previous credit history are typically started out with a score in the 600-range. You can begin to build a good credit score by applying for one or two credit cards and opening a checking and/or savings account, if you don’t already have one. From there, it’s simply a matter of demonstrating that you can handle credit responsibly: keep credit card balances low (ideally 10 to 30 percent of the credit limit) and pay all bills on time, without fail, every month.

If you find it hard to get approved for a credit card, invest in a secured credit card which is backed by money you put into the account.

4. Having lots of credit cards is bad for your credit score.

False. Having lots of credit cards isn’t in itself bad. If the cards are used responsibly, it could actually help your credit score. Lots of people with near perfect credit scores carry as much as 7-10 credit cards. The more credit cards a person has, the higher the total available credit, which means that it is easier to keep the credit utilization ratio low. The credit utilization ratio is a measure for how much of the available credit across all cards is used each month, and this ratio makes up a full 30 percent of FICO scores. With lots of credit cards, it’s easier to keep this ratio below 10 percent and get the highest rating on this component of credit scores. The trick is not to use all of the cards each month, to keep balances low on the cards used, and pay the balance off in full each month. (If you have multiple cards, be sure to alternate the ones used, as card issuers at times close inactive accounts.)
Of course, the opposite can also be true. Having lots of credit cards with high balances will wreck your credit score faster than you can say “FICO.”

5. Having debt always pulls down your credit score.

False. Having a variety of different types of debt like credit cards, a car loan, and a mortgage will actually improve your credit score, as long as it’s not excessive levels of debt and as long as the debt is handled responsibly. That again means following the three credit score mantras: pay all bills on time, keep balances low on credit cards, and preferably, pay all credit cards off in full each month.

6. Missing a credit card payment once in a while is okay, as long as you continue to pay next month.

False. Missing even one payment is a sure way to torpedo your credit score. That applies not just to credit cards, but to all other loan payments as well. Lenders view missed payments as a sign of financial instability, and even one 30-day late payment can cause your credit score to drop by several hundred points.

7. You can improve your credit score in less than a year.

True. People with low credit scores can raise them by as much as 100 points or more in a year simply by getting current on any past due payments, reducing the outstanding balances on their credit cards, and paying every single bill on time.

8. It takes 5 to 7 years to clear up bad marks on your credit report.

False. If you do nothing, it’s correct that bad marks like notices about collections and missed payments will stay on your report for as long as 7 years. However, if you’re proactive, you can often clear up bad marks by e.g. writing a goodwill letter to collection agencies asking them to remove collection reports for past due debt you’ve cleared up.

In addition, pulling your credit report and disputing inaccurate information can go a long way to remove bad marks on the report. Credit agencies must correct or delete the following types of information from your credit report:

• Disputed information which the lender fails to verify;
• Erroneous information that you can document is incorrect
• Incomplete information that hasn’t been updated, such as e.g. a late payment that has since been made current.

Scoring:
7-8 correct answers: Excellent—your Credit Score savvy is right up there with the experts’; apply your knowledge, and you should enjoy top credit scores all life.
4-6 correct answers: Good—with a little bit more reading, you might learn some more useful facts about how to boost your credit score.
1-3 correct answers: Well, it’s a good start, but your finances would likely benefit from a little more education about credit in general and credit scores in particular.

Despite advertising claims, there’s really only one way to get your free annual credit report—through AnnualCreditReport.com, the official site where consumers can collect their complementary credit reports from each of the three major credit bureaus. But what about your credit score, that vital three-digit number that lenders place so much weight on? Is it possible to extract that little, yet crucial piece of information free of charge?

Unfortunately, the answer is no—the complementary annual credit report does not come with your FICO score. For a fee, you can purchase a separate brand credit score from two of the credit reporting agencies, Equifax and Transunion, after you receive your free annual credit report at the website. These scores, however, are socalled FAKO scores, not true FICO scores. Equifax’s ScorePower and Transunion’s Credit score are the credit bureaus’ estimations of what a person’s FICO score should be based on their own proprietary formula.

So, before shelling out $7.95 or more to get your credit score, consider using one of the many FICO score estimators on the market. The best estimators offer valuable indicators as to what a consumer’s true FICO is. While there are many different types of credit scores, FICO scores are by far the most commonly used. According to Fair Isaac, the company that developed FICO scores, 90 percent of the largest banks use FICO scores when making credit decisions.

Here are several resources for some of the best FICO score estimators:
Bankrate.com. Simple, easy and fast. Answer ten questions about your finances and past payment history, and in less than three minutes, Bankrate.com’s FICO Score Estimator, will give a fairly accurate estimate of your true FICO score. Bankrate’s FICO Score Estimator is offered in collaboration with myFICOScore.com, created by Fair Isaac, the company which originated FICO scores.

Quizzle.com. On this free membership site, consumers can access a credit score developed through CE Analytics, which uses their Experian credit report data in its calculations. The site’s CEO, Todd Albery, claims that the Quizzle FAKO score comes closest to the actual FICO out of all formulas the company has tried. The site also offers a variety of credit improvement tools for consumers looking to invest in such products and services.

VideoCreditScore.com. If you’re the more visual type, VideoCreditScore.com gives a good overview of the steps to estimate FICO scores. The site contains a ‘cheat sheet,’ which gives you the answer that would give you the most points on each component of the score. While that may seem like gaming the system, it’s a great way to see what it would take to make your credit score improve.

MyFICO.com. MyFICO.com is sponsored by Fair Isaac, the company that originated FICO scores. This site isn’t free, however, if you’re planning to apply for a mortgage or other large loan, paying a fee to get your real FICO score makes sense. For $15.95 MyFICO.com provides two true FICO scores: one based on your TransUnion credit report and one based on your Equifax report (Experian-based scores are no longer offered). Why the double FICO score? Each credit bureau has its own set of information for each consumer, so the input for the FICO formula will be different depending on which bureau’s accounts are used.

The fee also gives you a look under the hood, so to speak, allowing you to discover the factors affecting your FICO score, access to your credit report. The site also offers a FICO score simulator, allowing users to estimate how much their credit score would be affected by changes to their financial situation.

Subprime credit cards, or unsecured credit cards as they are also called, have met with much criticism because they come with very low limits, as low as $250, and they charge hefty fees for the services they offer. The new CARD Act of 2009 does put some curbs on the fees that subprime cards can charge by restricting subprime card issuers from charging more than 25% of the credit limit the first year, once the new rules step into effect in February of 2010. However, don’t expect subprime credit cards to become more reasonably priced any time soon. There are plenty of openings for subprime card issuers to continue to charge high fees to card holders.

So, are credit cards for people with bad credit worth the high costs? According to one study, if your aim is to improve your credit score, yes, they are. The study was performed by the credit bureau TransUnion, which was commissioned by Citizens for Equal Access to Credit to conduct a study of 365,000 subprime cardholders over a two-year period.

The study found that low limit credit cards can be an effective way for people with bad credit to rebuild their credit, as long as they pay their card on time. During the two-year period, 37% of the subprime cardholders included in the study saw an increase in their credit score. For about one out of five subprime cardholders, or 17%, the increase in the TransUnion credit score was 40 points or greater. Almost 20% of the cardholders who had a subprime score increased their score to near-prime, prime, or above prime credit score over the 24 months of the study. In addition, 28% opened a prime credit card with a credit limit of $1,000 to $2,500+. Just as encouraging, 58% of the study participants received a promotional offer for a prime credit card during the last twelve months of the study.

Proponents of low-limit credit cards have long argued that they are worth the high costs because without them, millions of Americans wouldn’t be able to get a credit card and begin to increase their credit score. The TransUnion study indicates that low limit credit cards may indeed be an effective way to begin to build or rebuild credit.

Of course, graduating to a prime credit card with a higher credit limit presumes that you follow the basic guidelines for increasing your credit score. The untold story of the study lies in the 63% of participants who either stayed at the same credit level or decreased their credit score. Indeed, more than half of the participants, or 52%, actually had their credit adversely affected, because they had one or more payments more than 90 days late over the two-year study period.

The study says nothing about whether that was because participants didn’t make good on charges they had made, or whether it was because they didn’t realize the magnitude of the fees that come with subprime credit cards and refused to pay these. At any rate, the large number of people defaulting on the subprime credit cards underscores the importance for consumers with bad credit to be well educated about what it takes to improve credit using an unsecured credit card.

For tips on how to qualify the fastest for a prime credit card, see Bad Credit? 5 Tips to Work Your Way up the Credit Ladder.

Before going into the results of the study and what they mean for cardholders, let’s take a quick look at why lower credit limits could lead to a lower credit score. The total credit limit affects a vital part of the credit score, known as the credit utilization ratio, that is, the percentage of the available credit used. Most experts recommend keeping the utilization ratio well below 30% to avoid your outstanding credit card debt from pulling down your credit score.

For example, if your total revolving credit on all credit cards is $10,000 and you carry a $3,000 balance on your cards, you credit utilization ratio is 30%. Now, if your card issuer cuts that $10,000 limit by, say $5,000, the credit utilization ratio instead will be $3,000 out of $5,000, or 60%, high enough to pull down your credit score.

Because credit card companies have slashed card limits for millions of consumers over the last year, a large question has been the degree to which this actually did affect the credit scores of those cardholders. According to the new FICO study, it does, but not as much as one would think, and not necessarily in the direction you would think either.

The study looked at the credit score of about 33 million cardholders, who had their credit limits reduced between October 2008 and 2009. FICO focused on an estimated 24 million consumers whose credit card limits were not reduced because of adverse risk triggers, such as late payments late or missing payments, high credit card balances, or a high credit utilization ratio. The credit limits of these cardholders were mainly cut because of inactivity as part of credit card companies’ efforts to cut back their revolving credit exposure.

The cardholders in the study group all had high credit scores, with most scoring around 760 on the 300-850 FICO score range. Most carried very low balances on their credit cards, and as a result, their credit utilization ratios were very low. The credit limit reduction averaged $5,100, which on average was 14 percent of this population’s total revolving credit. The highlights of the findings were:

• About one third of the group, or 8.5. million cardholders, experienced a slight drop in credit score, typically around 20 points.
• About 3.5 million saw no change in their FICO score
• About 12 million cardholders actually increased their credit score after the credit limit cut.

Why the big variance? In its report, FICO points to several factors. First of all, other factors in the consumer’s credit history might impact the effects on the credit score. Secondly, the amount of credit limit cut could also affect the score. People who had less credit available, and thus would see a higher percentage of their total credit limit cut, would be more liable to see their credit score adversely affected.

FICO points out that how consumers reacted to the credit limit cut also had an impact. Some cardholders reacted by paying down other card balances or by applying for a new credit card to recuperate the lost credit line. Both actions would improve the credit utilization ratio, and thus could lead to increased credit score. On the other hand, cardholders who didn’t take any compensating actions might be more liable to see their score affected.

Lastly, consumers with high credit scores tend to have a low credit utilization ratio, and as a consequence, are much less vulnerable to a decrease in the available credit. On the other hand, consumers in the mid-range of the credit score spectrum are likely to have a higher credit utilization ratio, and therefore are more likely to see their credit score suffer because of credit line reductions.

The bottom line: You can’t do much to safeguard yourself against credit limit cuts, but you can prevent them from affecting your credit score. In addition to always paying your bills on time, keep your card balances low. Credit counselors recommend using less than 30 percent of your total available credit. However, in times of uncertainty like these, keeping card balances around 10% is preferable. That way, if your card limit is cut, your credit utilization ratio, comparatively speaking, will still stay within levels that won’t drag down your credit score.

Even worse, with the changing credit card landscape, the rules for what it takes to keep your credit score high are also changing. It’s no longer enough to simply pay your bills on time; you have to be much more proactive to keep your credit score as high as possible. To keep your credit score in tip-top shape, here are six important credit score moves to make now.

1. Keep Track of Your Limits. Credit card companies have been cutting back credit lines like never before. They have already cut credit limits by 1.25 trillion, and some experts estimate that card issuers will scale back credit lines by another $1.5 trillion before the current pullback in credit card lending comes to an end. Card issuers don’t have to notify cardholders of credit limit cuts, so your limits could have been slashed without your noticing, particularly on cards you rarely use.

The more cards that get their limits cuts, the more your score could potentially be affected. Why? Because credit limit cuts may affect an important part of your FICO score, the so-called debt-to-credit-limit ratio. This is a measure of how much a person uses of his or her available credit, and it makes up a full 30 percent of the FICO score. When your credit limit is cut, it will affect your debt-to-credit ratio if you carry outstanding balances on your credit cards, because you will now be using a higher percentage of your available credit. This in turn could lower your credit score, depending on how much your credit limit was cut. So, keep a list of all your credit cards with their current credit limit and keep it updated every two to three months to avoid adverse effects from credit line cuts.

2. Keep balances below 30%. Many card holders have seen their limits lowered to $2,000 to $3,000. For cards with low credit limits, it’s much easier to rake up a credit balance that is high in relation to the available credit. If your card limit is $10,000 and you regularly charge, say, $1,800 to your card each month, you’re only using up 18% of the available credit. If the card limit gets lowered to, say, $2,000, however, those $1,800 in monthly charges now turns into a debt-to-credit-limit ratio of 90%. It will make it look like you’ve maxed out your credit card and will count against your credit score, even though you haven’t changed a thing.

3. Use all your credit cards. These days, when it comes to credit cards, it’s use it or lose it. Credit card companies are cutting back their risk exposure not just by slashing credit limits, but by outright closing down credit card accounts. Credit card accounts that aren’t being used at best are unprofitable for credit card companies, at worst they represent an unknown credit risk. For this reason, credit cards rarely used are the first to get targeted for limit cuts or outright account closure. To avoid this, use all your credit cards regularly and responsibly–ideally pay off the balance in full each month.

4. Be Wary of Balance Transfer Deals. Balance transfer offers at 0% APR used to be the closest you’d come to a free lunch. However, nowadays, they are not only generally more expensive to take out; they are much more risky. Firstly, it is harder to roll the balance over into another low rate card once the introductory period expires, so you could find yourself paying higher interest rates than you did on the card you made the balance transfer from. Secondly, you have to be careful not to carry a balance on any one card high enough to affect the debit-to-credit-limit ratio and hurt your credit score.

5. Don’t close old credit cards. When card issuers cut your credit limit or raise your interest rate, it’s a natural reaction to simply want to close your credit card account. However, fifteen percent of the FICO score is determined by the length your credit history. When you close old credit card accounts, it will shorten the length of your credit history, particularly if it’s a card you’ve had for many years, and this could cause your score to inch downwards.

6. Don’t apply for new credit cards willy nilly. Applying for a new credit card affects FICO scores in several ways: For each credit card application submitted, points are deducted from your FICO score. Further, by adding a new credit card, the average age of your credit history will go down, again possible detracting from your total score. Finally, most credit cards these days are issued with very low credit lines, and using these to rake up new debt could hurt your debit-to-credit-limit ratio.

So with credit scores calling the shots in so many important areas of your life, have you ever wondered why credit scores differ so much between the three credit rating agencies? In fact, even though the three credit bureaus have access to the exact same information, it’s possible for someone to have a credit score of 705 on their Equifax report, 730 on their TransUnion report, and a credit score of 815 with Experian. What gives?

There are three main reasons that credit scores vary between the credit rating agencies:

Different ways of calculating the score. There are many different statistical methods for calculating credit scores. The most widely used method is the FICO score, which was developed by the Fair Isaac Corporation. However, the credit rating agencies all use their own methods of calculating credit score, sometimes referred to as FAKO (or FAK-O) scores. The three methods of calculating at times come close to each other, but they can also vary as much as 100 points.

Different information on file. The information available to the credit rating agencies may vary slightly. One of your creditors may report to only two of the bureaus, while another creditor reports to only one bureau, and still others report to all three. This difference arises mainly from differences in the computer systems different lenders use to electronically report credit history data to the credit rating agencies. You may also have a mistake on one report, which is not on another, or a bad mark could be removed on one credit report, but not on another. These are all reasons why the information on file about your credit history may vary between agencies, creating variance among credit scores.

Credit Score Estimates. In many cases, the credit score available to consumers are estimates, not the real numbers. This can also be a source of variance.

Should you be worried that a lender might pull the report with the lowest score and get a less favorable picture of you? Not too much. The difference could arise because the number you receive is an estimate. More importantly, for big loan decisions like a mortgage, lenders generally pull all three reports and use the average of the three scores.

Still, there are steps you can take to bring your scores more in line. Firstly, get a copy of all your three credit reports. Then compare the three carefully, first to see if all the information is accurate, and secondly to see if each report carries your complete information. If you find inaccuracies or omissions, file a dispute with the credit rating bureau asking them to correct it. You can do this online or by sending a letter. Be sure to report mistakes that appear on all three credit reports to all three credit agencies, otherwise the changes will just show up with the one agency with which you file the dispute.

Correcting mistakes or inaccuracies on your credit report is worth your while, because it could well improve your credit score as well. Once you have filed the dispute, follow up after three months to see if the mistake has been corrected.

You’re entitled to a free credit report once a year from all three credit rating agencies, and these can be downloaded directly at Annualcreditreport.com. You will have to pay a fee if you want to get your credit score too. You can also get a free credit report if you have been denied credit within the last 60 days, by calling the credit rating rating agency whose report the decision was based on.

Here are five steps to finding and disputing errors on your credit report.

Step 1. Get a copy of your credit reports.

There are three credit reporting agencies—TransUnion, Experian, and Equifax. While it might seem that getting a credit report from just one of the credit bureaus would be enough, financial advisers recommend checking out all three, because they often differ. By law, the credit reporting agencies are required to let consumers see their report for free once a year. To download a copy for free, go to www.annualcreditreport.com or call 877-322-8228.

Step 2. Review your credit reports line by line.

When you receive the credit reports, go through each report line by line to look for inaccuracies. Here are some of the things to look for:

• Is the credit limit on all credit card accounts correct? In some cases, credit card companies won’t keep the credit limit on a card updated. This can affect your credit score by making it look like you use more of your total available credit than is really the case.
• Are there any accounts or items that you don’t recognize? Accounts or other financial activity you don’t recognize could be a sign of identity theft.

Step 3. Highlight the negatives

Look for negative credit items that pull down credit scores. These include late payments, missed payments, collections, public record items, foreclosure proceedings, and charge-offs. For each item that needs attention, highlight it on each credit report and return to it later.

Negative marks stay on the credit report for many years after they get resolved. Unpaid collections will be marked on the credit report as “collection,” and if it’s paid, it will be listed as “paid collection.” Missed payments, paid tax liens, and public record items stay on the credit report for seven years. Bankruptcies remain on the account for 10 years, and unpaid tax liens for 15 years.

Step 4. Dispute inaccurate information.

In the past, inaccuracies could only be disputed by mail. Nowadays, each of the three credit bureaus, Experian.com, Transunion.com, and Equifax.com, allow consumers to submit disputes directly at their website.

When submitting the dispute, state why the information is incorrect and enter any supporting facts. If you submit the dispute online, once you click the Submit button, a notice is automatically sent to the source of the negative item.

When you file a dispute, the party that submitted the negative item must verify the account data and respond within 30 days. If the party is unable to verify the information or doesn’t respond within the required 30 days, the negative item will be removed from the credit report. You will receive a credit report reflecting the results of the dispute by email for online dispute and by mail for disputes that were mailed in.

5. Review the results of the dispute.

If the source of the negative item verifies the information, the negative mark will remain on the credit report. But even if the item stays on the report, you still have options. If there are unique circumstances involved, add a 100-word personal statement to the report, explaining your side of what happened. While the statement won’t affect the credit score, potential lenders, employers, or landlords may take it into account when looking over your credit report in the future.

As negative items disappear from your credit report, your score will improve, steadily and surely, as along as you abide by the basic rules for keeping a good credit score. It will take months to see results, but for the little time invested, the effort is well worth it.

1. Credit cards establish a credit history.
One component of FICO scores is the length of your credit history. Unfortunately, for people just starting to build their credit, this can be a Catch-22. It’s hard to get approved for a loan without a credit history. However, without a loan, they can’t begin to establish a credit history.
Credit cards break this deadlock, because they are easier to get approved for than other types of loans. Applying for a credit card is an easy way to begin to establish a credit history. Credit card accounts that have been open for five to ten years or longer are a great way to bolster the part of your FICO score derived from the length of your credit history.

2. Credit cards help you show that you can be trusted to pay off your debt.
The whole system of FICO scores is based on the assumption that people are likely to act in the future the way they’ve acted in the past. Someone who has made regular payments on their debt in the past and has never missed a payment is likely to continue to act like this in the future. In short, if the payment history on your credit cards shows that you can be trusted to meet your debt obligations, this counts as a positive on your credit score.

3. Credit cards allow you to demonstrate that you can handle credit responsibly.
As far as FICO scores are concerned, how much you use of the credit available on your credit card shows how responsibly you manage credit. If you go to town and rack up credit card charges you can’t pay off, it’s an indication that you, for whichever reason, rely more heavily on credit than is prudent. On the other hand, if you can keep credit card balances at around 10% of your total credit limit, it shows that you know how to budget and manage your finances. This will give your FICO score a big boost upwards.

4. Credit cards show that you can manage different types of debt.
A portion of FICO scores relies on the credit mix a person has. Having different types of loans, like credit cards, a mortgage, and an auto loan, will give your FICO score another push upward. It’s taken as evidence that you are financially savvy and able to manage different types of debt responsibly.

Of course, credit cards are a two-edged sword. If you keep credit card debt low and pay your credit card bills on time, having credit cards are a great way to increase your FICO score. Unfortunately, if you do the opposite, credit cards can also be a great way to ruin your credit score faster than you can say FICO.

Credit scores have always been important, but today, more than ever, your credit scores rule your financial destiny. With tightened lending practices and stricter underwriting rules, paying attention to your credit score is no longer simply a choice, it’s a necessity. If your credit score is already high, follow basic rules of credit to keep it that way. If it has fallen below average, now is the time to take steps to increase your credit score.

Your credit score affects not just your ability to get approved for a mortgage, an auto loan or a new credit card. It also determines the loan terms and hence how high your monthly payments will be. In addition, credit scores often play an important role when you apply for a new job or seek to rent an apartment or house, as prospective employers or landlords often rely on a person’s credit report as part of their background check.

Fortunately, new online tools make it easier than ever to keep an eye on your credit report and even take steps to improve your credit score. Here is CreditCardGuide.com’s selection of the top 3 online credit management tools.

Tool #1: Get a Free Copy of Your Credit Report

By law, everyone in the U.S. is entitled to a free copy of their credit report once a year. AnnualCreditReport.com is the official site to go to download a free copy of your credit report from each of the three credit reporting agencies, Equifax, Experian, and TransUnion. At the site, you can download a copy of your credit report right away, or request a copy to be sent by phone or mail.

Be aware that all three credit bureaus do some heavy-duty upselling at the site, trying to sell you numerous additional services. Most people don’t need these extra services. If your credit report needs further monitoring or repair, there are usually better options. If you are curious about a service, sign up for the free trial period, but be sure to cancel before it expires.

Tool #2: Estimate Your Credit Score

Reviewing your credit report is a good place to start, but you also need to know what your credit score is. While credit reports can be downloaded for free once a year at AnnualCreditReport.com, the credit bureaus charge a fee of $9.95 or more for your credit score.

Instead, use a free online credit score estimator to estimate your credit score. Simply answer a number of questions, and the FICO Score Estimator will calculate a range within which your FICO score is likely to fall. In most cases, this will be enough to determine whether your credit score is okay or in need of attention.

Tool #3: Fix Credit Report Errors

One of the fastest and easiest ways to improve one’s credit score is to fix credit report errors. An estimated 75% of credit reports contain some type of error, and many of these negatively impact credit scores. Something as simple as a credit card company failing to update the credit limit on a credit card can pull the credit score down by making it look like the card holder is using more of his or her available credit than is actually the case.

A new website, SmartCredit.com, offers an easy way to both check your credit report for mistakes and correct mistakes quickly and easily online. SmartCredit.com offers several advantages over simple credit-monitoring websites. It highlights the negatives on the credit report and makes it easy to see how much a negative is pulling down the credit score.

Even better, SmartCredit.com makes fixing credit report errors an easy mouse click away. The site’s technology communicates electronically with a vast number of banks, credit card companies, and collectors and automatically routes corrections or complaints to the right place. This can save you a lot of time and confusion trying to find the right department and location of creditors and banks. The site also provides tools to request goodwill corrections of negatives (such as year-old entries that continue to mar a person’s credit) or debt settlements. The site automatically estimates how much your credit score is likely to improve based on those actions.

SmartCredit.com is a paid service, but the ease of resolving errors directly online instead of by snail mail makes a short-term subscription to the site well worth the cost—if your credit report contains errors. If it does not, you can always cancel within the five-day free trial.