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While it’d be nice to live a “credit-free existence,” it can be difficult to do so in today’s world. Purchasing a house, a car or securing a loan typically requires some level of credit. The most commonly used credit score is called FICO, where credit scores range from 300 to 850, with the national average being around 723. These scores fluctuate over time, depending on a person’s activities and the transfer of information, so naturally it’s a good idea to get a free credit report each year to ensure your profile is up-to-date. Since the Fair and Accurate Credit Transactions Act of 2003, consumers are entitled to one free credit report a year from Equifax, Experian or TransUnion. However, that report comes with some limitations: You can see what items are on your report, but to see the actual score it will cost you $6-$16.

The history of identity theft shows us that criminal activity can cause a bad score but the most common way people get poor credit scores is to miss a credit payment or to pay late. At the time you may think, “Who cares if it’s just a few days late? They’re still getting their money.” However, once that lateness or missed payment is reported, a credit score can drop as much as 100 - 150 points according to one leading credit repair attorney and will take 24 months to be fully restored. To remedy the situation, be sure you bring all your credit accounts current, paying off late payments and always paying at least the minimum monthly fee, rather than waiting to pay it all at once. For many people, paying automatically through debit or setting a monthly cell phone reminder a week in advance are the best ways to ensure bills get paid on time.

To manage your credit score and credit card debt, you’ll need a plan. Create a chart showing the total balances and minimum monthly payments for all your accounts. Some people pay off the smallest balances in full first to feel like they’re gaining ground. Yet it may be more reasonable to pay off the highest interest rate cards first. Get into the habit of paying much more than the minimum monthly payments; otherwise, it could take you 10-30 years to pay off your balances! Also try to avoid making new purchases until your old accumulated debt is paid off. Be aware that getting close to your credit limit will also weigh against you, so you should try to keep your usage at 30% of your total limit, or less. Following these tips will put a damaged credit score back on the road to recovery.

As you may have imagined, companies aren’t always diligent about ensuring that credit score adjustments are reported or applied. Many times, consumers are surprised that certain items still appear on their credit report as unresolved! In fact, a 2004 Federal Reserve bulletin stated that 29% of 300,000 credit reports contained accounts with balances more than three months out-of-date. Some creditors don’t even report that you make your payments on-time either. If you’re preparing for something big, then Experian spokesman Donald Girard advises that you “make the payments several months ahead of time” to allow your “history to stabilize before it is reviewed.” He adds that “unusual activity, such as large out-of-cycle payments, is a change in behavior that can be an indicator of risk, even though it is basically a positive action.” Keeping your credit balances low at all times is another key maneuver to improve your credit scores, he says.