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Boosting Your Credit Score

By Ellen Chang

NEW YORK (MainStreet)--Having a healthy credit score may be the most important thing you can do financially since repairing damages can take time.

Your credit score is examined by various lenders when you try to obtain debt from a credit card company or purchase a house or car. Most lenders use the FICO score to assess your credit, the amount of money you can borrow and the amount of interest you will pay.

Have a strong and high FICO score means you can receive the lowest interest rates on loans and obtain higher quality credit cards.

"Lenders want to see a credit history and to determine if you are a responsible borrower," said John McDonough, president and CEO of the Studemont Group based in The Woodlands, Tex. "People should definitely have credit scores in the 600 to 700 range to be considered a low risk borrower and get better interest rates. You want to show that you have a proven history of meeting obligations."

Repairing your credit history can be accomplished over time, but expect 12 months in most cases before you see improvement, said Vicky Stringer, senior account executive and certified credit consultant in Mobile, Ala. for CIC Mortgage Credit, Inc.

One thing every consumer should do is to obtain his credit report once a year to check for any discrepancies or mistakes such as late payments which are listed incorrectly, said Stringer. You can obtain a free one at www.annualcreditreport.com. The website also allows you to file disputes for free.

Avoid paying for a credit score, because those reports offer a consumer version of scoring which usually weigh some fields differently than a mortgage lender's version of scoring does, easily elevating your score to be 100 points higher, she said.

Another tip to raising your credit score easily is to pay down your revolving debts such as credit cards. Always maintain a balance that is below 50% of your limit and never max them out, said McDonough.

"FICO tracks how high your debt is relative to your credit limit," he said. "FICO scores track a high water mark, and it always shows it even if you pay it down."