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By Steve Bucci

Part of Credit Repair Kit For Dummies Cheat Sheet

Building good credit takes time. Follow these tips to get a great credit score the first time around or, if you’ve made some mistakes, to recover in the shortest time possible.

  • Clean up your credit reports every year. Use the Annual Credit Report Request Service to access your report and dispute errors and out-of-date data to boost your score. Up to 25 percent of credit reports have errors; yours may, too.

  • Keep balances below 50 percent of your credit limits. High credit balances mean lower scores.

  • Pay your bills on time. It’s that simple.

  • Keep accounts open longer. Older accounts score higher because they establish the length and stability of your credit history.

  • Limit new credit because it lowers your score. New credit and more inquiries on your account increase your risk profile and lower your score, especially if you don’t have a long credit history. Add new credit only when it makes sense, not just to have another card or to get an incentive gift.

  • Use more than one type of credit. Doing so shows that you can manage different types of credit and different types of payments (fixed or variable). Have a variety of credit cards, retail accounts, installment loans, and other types of credit.

  • Use secured cards to help establish or reestablish credit. Secured cards are accepted by merchants and scored like regular credit cards, and the balance is guaranteed by a bank deposit. This makes credit easier to get and builds or rebuilds your score faster.

  • Avoid cosigning; it’s dangerous to your credit score. If the person for whom you cosign defaults, you may not know about it for months. As a cosigner, you’re 100 percent responsible for the debt, including any penalties, and your credit score suffers as well.