1. If you are applying for a mortgage, never pay off old collections, judgments or tax liens until the closing. (Ask your mortgage lender if you pay these debts at your closing.)

When you pay these debts off before applying for a mortgage, they are treated and scored as new and recent accounts with delinquent activity. This drives your credit scores down.

2. Closing credit card accounts initially lowers your scores. Again, this is due to your action showing up as new and recent credit activity. Any new or recent activity will have an initial detrimental effect on your scores.

Of course, after you close inactive or unnecessary accounts the scores will eventually come up because you will have less credit or potential credit risk. But it may take months for this to occur. Unfortunately most people close superfluous accounts right before applying for a loan thinking that it will improve their scores. If you want to close these accounts, do so well in advance of applying for a loan.

3. Don't keep high balances on credit cards and revolving debt. Maintaining balances under 30 percent of the available credit on each card can improve your scores. For example, if your available credit on a card is $1,000 keep the balance under $300. Also remember to pay off debt instead of moving it to other revolving accounts. Moving balances to zero- or low-interest credit cards can actually lower your scores.

Lured by credit card offers with low initial rates, many consumers move their credit card balances over and over again to keep their accounts at lower rates. This creates new activity on your credit report and lowers your scores.

4. Don't apply for credit you don't need. Many people are tempted by department store promotions offering them 10 percent to 20 percent off their purchases if they apply for a credit card. What may look like a great deal really isn't because the new account will lower your credit scores.

Use credit cards wisely. Remember that someone who has a good credit card history is viewed more favorably by credit bureaus than someone who has no credit cards. To build an effective credit history, have a mix of installment credit (cars, furniture, etc) along with credit cards and mortgages.

5. Don't assume the collection account, judgment or tax lien you paid has been reported to all three credit bureaus. Likewise if you close an account, don't assume that has been reported to all three bureaus.

Unfortunately, agencies and creditors are quick to report you when you owe them money or have made a recent mistake. But they can be slow to report the final resolution to that account when you have paid them off. Collection agencies and the creditors that have sold your account to the collector are both extremely poor at reporting the account paid in full. If you have declared bankruptcy you need to be especially vigilant. Less that 50 percent of the accounts, collections and judgments discharged in a bankruptcy will show up on your credit reports after the completion of the bankruptcy.

It is your responsibility to make sure that all three bureaus have the most recent and accurate information about you. You can write to them or file online disputes with each individual bureau. Be sure to supply them with copies of paid receipts and any correspondence you may have to ensure that your record is recent and correct.

Ron Cahalan is a 26-year veteran of the mortgage lending industry. His controversial new book, “Lenders Are Liars,” exposes what he calls the greed and lack of ethics in the industry. It provides steps homeowners and borrowers can take to get the best rates and negotiate lower closing costs and other essential information homeowners must know.