5. Pay on Time

This one is quite obvious. But after 12.5 years in mortgage business, I discovered it still needs repeating. Your creditors were gracious enough to loan you money. Now pay your damn bills! If you don't, your credit score decreases. EVEN IF ONLY 30 DAYS LATE!

That's right folks. For some reason people think, "I'm only a few weeks late. What's big deal?" Well, for loan company, if you pay late but consistent, they make a lot more money with late fees and more interest (if a simple interest loan). For you, your credit score is damaged. If you think long-term and credit score, I'm certain you would not have a cavalier attitude.

6. Pay Down Debts

This seems like an obvious method, doesn't it? But it is not as transparent as you might think. Remember, we're playing with high-level statistics and probabilities which evaluates and forecasts trends in your behavior. Here's what you do...

Never pay off your revolving debt in it's entirety! Isn't that a surprise? Think about it. Your credit score is a reflection of your ability to manage your credit. Paying off your debt is not managing your debt. If you have a zero balance, how can you manage it? You don't. It no longer exists. And you cannot manage what does not exist, right? Therefore, in terms of credit score, you have demonstrated your ability to swiftly pay off accounts to avoid managing them. Thus, slightly decreasing your credit score.

One exception, of course, is if you're over extended to begin with. Pay off what's necessary to make your credit profile look great. Then manage remaining credit.

7. Don't Close Accounts

Even if you pay off revolving debts, do not close account. The longer an account is open with no negative reports, better it reflects in your overall credit score. This is due to weighted-average in credit score formula. Many credit experts suggest a balance of 30% of your credit limit. That's ideal. But you can go as high as 70% and still maintain a healthy credit score.

8. No New Credit

You must be vigilant in your credit behavior if you want best credit score. Therefore, do not get any new credit unless it is absolutely necessary. Each time you apply for credit, an inquiry is added to your report. This usually drops your credit score slightly. When you have fresh credit, there is no track record how you will manage (or pay) this account. Therefore, it's a higher risk which results in a minor drop in your credit score. Remember, your credit score is about risk assessment.

Here's what you do: obtain credit for your housing, transportation, college or continued education and 3-5 credit cards. That's really all you need for personal credit. If you want more credit, request a credit limit increase on your current cards rather than apply for new ones.

9. Maintain A Mix of Credit Types

If you show you can handle different types of credit at same time, you are rewarded with a great credit score. In other words, get installment loans like vehicle, personal loan or mortgage. Get revolving credit like credit cards: Visa, Mastercard, Sears, Sunoco Gas, Costco. By mixing it up, you demonstrate you can manage your credit because you will have short term and long term credit with a fixed payment. As well as a "variable" monthly payment on your credit cards.

Keep these accounts open with a balance of 70% or less and paid on time and you will witness your credit score climb to great heights.

10. Don't File Bankruptcy or Foreclosure

Here's most obvious advice: Don't file for bankruptcy or foreclosure. These stay on your credit report for 10 years and always decrease your credit score. The older bankruptcy or foreclosure account becomes, coupled with re-built credit history, less of an impact they play on your credit score.

Contrary to popular beliefs, you can legally delete a bankruptcy and foreclosure. It's not easy. But it's possible. See advanced methods for that solution.

To quickly rebuild your credit history after a bankruptcy or foreclosure, use Round Robin strategy above and get secured credit cards. Now you can even get a car loan or mortgage right after bankruptcy.

© 2004 David Czach.

-------- Editor's Note ----------

What will it cost me?

Refinancing does carry some costs that you need to be made aware.

Valuation Fee – This is fee for a professional appraisal of value of your house. Credit Report – An assessment of your credit health Escrow – Fee for money transferred by a third party. Lender Fees – Any other fees that are incurred by using a particular lender

Am I eligible? Applying for mortgage refinance is just like applying for another loan. There is a set criteria for acceptance. Every missed mortgage payment will count against you in application, either resulting in a greater interest rate or a refused application.

Should I choose refinancing? You will need to assess your current mortgage and changeover costs and savings to ascertain whether it will be of benefit to you. There are specific refinancing calculators that can help you determine net gain. The best one that I have found is here calcbuilder.com As a rule of thumb many lenders advocate that a 1% gap between your current interest rate and a refinance rate makes refinance a worthwhile option. Always make sure to speak to a financial professional before deciding to refinance your mortgage.