The first step on the road to improving your credit rating is to check your current standing with all three of the major credit rating agencies, Experian, TransUnion, and Equifax and be aware that you should then check it at least once a year because impossible and it sounds, more than one in three of all credit reports in the U.S. contain errors and many of the mistakes are major ones.

When you request your credit reports, be certain to spell out that they must also include contain credit scores, because without them, they'll be almost useless, and also be aware that 694 is an average score and that below 600 means that you have a less than good credit rating.

You'll hopefully never see the lowest credit score which is 300, and although I'd love you to receive a credit score of 750 which is the best that's currently available, be very thankful if yours is 720 or above, which is excellent.

If you find any mistakes in your credit report, which you more than likely will, you must dispute them as quickly as possible by sending the credit agency in question any details and copies of all paperwork that you believe might help.

Send the documents by certified mail, and be aware that apart from the postage that there shouldn't be any additional cost involved since all of the major credit ratings agencies offer a free credit report.

Here's How To Improve Your Credit Rating

Fortunately, the main contributing factor to a bad credit rating will most likely be the easiest to fix, if you're determined to do it.

The number one thing that you'll need to do, will be to reduce your debt-to-credit ratio which in the simplest of terms, means reducing as many as possible of your debts, across all open lines of credit.

Your debts should never exceed 80% of the ongoing credit that you have available at any given time, and if you're able reduce them to 50% then you'll be well on your way to having an excellent credit rating, because reducing debts improves a credit score much faster than anything else.

Pay special attention to reducing the number of small retail credit cards that you have, such as JC Penny, Sears and Lowe's etc because those types of cards cause far more damage to your credit rating than the major credit cards like Master Card and Visa do.

Once things are somewhat under control, and your credit rating starts to improve, you should contact all of the companies that you owe money to and start reducing your indebtedness. It doesn't matter if you do this extremely slowly, but be consistent, and once you've made a few payments, try to see if can reopen an account.

Paying down your debt and getting accounts reactivated will have a hugely positive effect on your credit rating and it will be worth any 'goodwill deposit' that you might have to pay.

If at some point in time you find yourself in need of a new loan, then check your credit rating online, and try to ascertain that the loan will be approved before you submit the application.

It doesn't really matter if you do this very slowly or not, but be consistent, and after you've made a few payments, try to see if can reopen an account?".

The main idea here is to keep the number of credit card enquiries on your credit report to an absolute minimum.