How Do You Clean Up Your Credit Report?:

*35 percent - credit history
*30 percent - amounts you owe
*15 percent - length of your credit history
*10 percent - types of credit used
*10 percent - new credit

So factors from how many late payments you make to how long ago you've established credit matter. Your credit score will be between 340 and 850. The average American, as of late 2010, is 666. The problem with this is that lenders offer borrowers with scores over 700 more favorable terms. How much of a difference does this make? Say you have a score of 770. You can get a mortgage with an interest rate of 4.645 percent, making your monthly payment $1546. If your credit score is average, 666, your interest rate will be 5.258 percent, making your payment $1658. That is a difference of $1344 a year. Over the course of 30 years, that can make quite a difference. Having good credit matters. Besides getting more favorable financing, credit scores affect your ability to set up utilities, rent apartments, pay lower insurance premiums, and qualify for certain types of employment. It's time to fix bad credit and make a stronger financial future for yourself.

How Do I Raise My Credit Score?:

*Get your free credit report (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm). You get a free credit report, not a credit score, from each of the 3 major credit bureaus each year. Get one, say from TransUnion. This will give you an idea of where you are starting. Save the other two to check your progress.

*If there are inaccuracies in your credit report (http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm), you can dispute them. Document everything.

*If you have serious financial problems, get help. There are nonprofit organizations in virtually every state that can offer you guidance. Take them up on it - they know what they're doing. In New Hampshire and Vermont, for instance, the CCCS (Consumer Credit Counseling Service) provides credit counseling (http://www.cccsnh-vt.org/FrequentlyAskedQuestions.html). The National Foundation for Credit Counseling (http://www.nfcc.org/) is another good resource. It cannot be emphasized strongly enough how helpful this can be. Go.

*Cut down. You're sick of hearing it, but you need to. There is something to cut in virtually all budgets. It may not be fun, but having a more secure financial future is.

*Don't add more debt. This includes sweeping all of your debt under a consolidation loan. These types of loans work only when people are committed to paying off their debt and changing the way they spend.

*Call your creditors. You can ask if they'll reduce your monthly payment; they may say yes. Do not, however, ask them to reduce your credit line. This will actually make your credit score worse.

*Sometimes you have to make the hard choice, and it is helpful to know what the right answer is. This is where credit counseling comes in handy. As an example: say you have an account that has gone to collections. This is a big red mark on your credit report (http://www.experian.com/credit-education/improve-credit-score.html), and you are getting hounded by letters and phone calls. You can either put some money on this to keep the creditors from calling or you can pay your credit card bill, which is current. What's the big deal if you miss one payment on your credit card? You can catch up next month. No! Pay your credit card bill! If you have a choice like the one above, keep the current accounts current. The other debt has already gone to collections; it cannot make your credit score worse if you do not pay. However, if you miss a credit card payment, that will decrease your credit score. And give you a nice pile of extra fees on top from your credit card company.

Ideally, you want to pay everything, but sometimes you do have to prioritize. Getting credit counseling will help you determine what priorities are most important for your finances. If you notice, nothing in the above tips for raising your credit score say you have to stop having fun. You just have to stop spending money unwisely. Look for free entertainment. Look for creative ways to cut back. No, not all of them will be fun or comfortable at first, but again, when you have a clean credit report and all the advantages that entails, it makes it worthwhile. Because of the fluctuations in the economy, now is the perfect time to rethink your spending habits and create healthier ones.