Most Importantly, don't be fooled by the come-ons. According to the Federal Trade Commission - you see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services.

They all make the same claims:

* Credit problems? No problem!

* We can erase your bad credit - 100% guaranteed.

* Create a new credit identity - legally.

* We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!

Do yourself a favor and save some money, too. Don't believe these promises. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report. An important first step is know and managing your credit score.

Your credit history reported is shown as a three-digit number, and you should know what that number is, especially if you plan to purchase anything on credit soon. This three-digit number is most commonly known as a FICO score. (FICO is an acronym for Fair Isaac and Co., the company that began developing credit-scoring systems in the 1950s.) The people at FICO claim to use 30 different factors to determine risk. However, they won't disclose the exact formula for arriving at these scores. All three of the major credit bureaus (Equifax, Trans Union, and Experian) use FICO scores.

Credit scoring uses your credit history to evaluate the likelihood of your loan going into default. Scoring has been used in the credit card and installment loan industries for years. Now, credit scores are also being used in the mortgage industry. Having a credit score helps lenders streamline underwriting by quickly categorizing borrowers. A high credit score may mean that your application will receive only a superficial review by the prospective lender. A very low score, on the other hand, may get you a quick review and denial.

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If you need to work on your credit report, the FTC warns that no one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete.

There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA).

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Your score will fall somewhere between 300 and 900; most consumers fall somewhere between 500 and 800. A FICO in the 500s is a very low score, which translates to lenders as high risk. The 600s is considered a medium score. Your payment history will be closely scrutinized and written explanations regarding the derogatory credit will likely be required prior to issuing any credit. Many lenders will not lend to someone with a FICO of less than 640. A FICO of 680 or higher is considered a high score, which means low risk for the lender and lower costs to the consumer.

To assist you in understanding why a bureau returned a low FICO score, each reporting agency provides up to four reason codes when posting a FICO score on a credit report. These reason or adverse action codes are the primary factors contributing to the compilation of an individual's score. If these factors are addressed, the FICO score can usually be impacted in positive manner.

Here are a few of the factors affecting your FICO scores:

1. Delinquencies.2. Too many accounts opened within the last twelve months.3. Short credit history and/or no recent credit card balances.4. Balances on revolving credit are near the maximum limits.5. Public records, such as tax liens, judgments, or bankruptcies.6. Too many recent credit inquiries and/or revolving accounts.7. Too few revolving accounts.

FICO scores are only "guidelines" and factors other than FICO scores affect underwriting decisions. Here are some examples of compensating factors that will make a prospective lender more lenient toward lower FICO scores: A larger down payment, low debt-to-income ratios, and/or an excellent history of saving money, and/or previous paid loan with current lender, and/or availability of home equity or other collateral.