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Many Americans have had problems with credit, sometimes through no fault of their own. Perhaps you are one of those Americans that have experienced difficulty with credit, perhaps you have maintained a stellar credit history, but your credit report tells a different story. The sad fact is that nearly 80 percent of the credit reports issued in the United States contain correctable errors.

Whether you have experienced some problems with credit in the past or your credit report does not clearly or truthfully represent your credit history, a less than flattering credit report may mean the you are denied credit altogether or will be asked to pay a significantly higher rate of interest than someone with a higher FICO credit score.

There are some very simple things that can be done to improve one's credit score that require little or no effort on your part. For example:

• Avoid overspending by establishing a realistic and manageable budget
• If your debt to income ratio exceeds 25% take steps to reduce that ratio. Try to keep your debt to income ration under 15% thereby allowing a cushion for emergency needs.
• If you haven't done so, establish a savings account, an investment account and begin to build a financial cushion. Even when money is tight, one can save a minimum amount each paycheck. If you can save through tax sheltered savings through your employment all the better. The point is save for your future.
• Get regular copies of your credit reports. Read and understand those reports. It often helps to consult a professional in the field to help you interpret what the reports mean. If you discover errors on the report, and the probability that you will is high, get them fixed immediately. If you don't know where to start, consult an expert.
• Don't avoid your creditors. If you have come on hard times the worst thing you can do is avoid your creditors. The bottom line is they want to get paid without having to take drastic steps to collect what is due them. Talking to the creditor, negotiating a deal you can live with, and making the agreed upon payments goes a long way to add positive information to your credit report.
• If your credit report is less than perfect it helps to get positive information added to your credit report. If you don't know how to do this, consult an expert in the field.
• Finally, protect your Social Security number at all costs. Don't give the number out to anyone but a trusted person. Don't ever fill in your SSN on an unsecured web site. When asked to verify your SSN ask the person to read it off to you and you will tell them if they are correct. If they won't do this you are being scammed. Ask if you can just verify the last four digits of your SSN. If this is not acceptable then you are being scammed. Ask if there are alternate identification numbers you can use other than your SSN. If not, then you must conclude that you are being scammed.

This advice is simple to follow. The consequences for not following these simple suggestions can be devastating. One client I am currently working with is paying over 20% interest on a car loan because of errors on his credit report. His car payments include over $300.00 of interest each and every month he makes a car payment. If he cannot refinance this car he may pay up to $15,000 extra in interest over a 60 month period than if he were able to finance the car at a reasonable rate through a prime lender. Your credit report tells an important story. Make certain it tells the right one.

Roger Passman is the President of WDC Financial Services, Inc. His firm works with clients to restore damaged credit, negotiate payment plans, and reduce debt. You can visit WDC Financial Services at http://www.wdcfinancialservices.com

Credit ratings are based on your credit report. When a financial institution - a bank, credit card company, or another type of company - loans you money, they will report to an agency how well you are keeping up with your payments. If you are keeping up with your payments, all is well. If not, then negative feedback is given to the agency and may stay on your credit report up to seven years.

However, before a financial institution will report to an agency, they will make an effort to contact you to help you get caught up on your payments. If you respond and get back on track, they will monitor you more closely, but it is possible that they will not report you to the credit agency. However, if you do not respond to their warnings, the financial institution will sell your debt to a collection agency. This is called "writing off the loan." The collection will purchase the bad debt at a cost lower than the amount due. It is better for the financial institution to get some of the money as opposed to none at all. When this happens, the financial institution reports this to the credit bureau, and you will be given the lowest possible rating on your credit report.

It is vital that you try to avoid this "writing off" of your debt. If you are at the point that your debt is in the hands of a collection agency, it is imperative that you respond as soon as you have been contacted by the collection agency. All is not lost at this point. Before making payment arrangements with the collection agency try calling the creditor one more time. In many cases, if you agree to pay the full amount immediately, they will remove the "gone to collection" mark from your credit repair. This is a key ingredient to fix poor credit.

If the creditor is unwilling to do this, you have no choice but to work with the collection agency. Keep in mind that at this point, your credit rating can not get any lower. You have no where to go but up--provided you are diligent in trying to fix your poor credit. Just a warning here. The collection will be very aggressive to collect the debt, often demanding that the amount be paid in full, even implying that they will take you to court if you do not.

One thing that you may not know about collection agencies is that they probably bought your debt at about half its value, so any payment over that is a profit for them. Try to come to terms as quickly as possible, even arranging to make a lump sum payment if you can arrange it. Their goal is to recoup their money, make a little profit, and close the case so they can move on and not drag things out.

Just a reminder, always try to deal with the creditor holding your debt FIRST. If things have progressed to the point of a collection agency, don't ignore their calls, but work on a payment plan as quickly as possible.

To Blast Your Credit Score Through the Roof and Fix Poor Credit, and for this article's Part 1 or Part 2, please visit this credit information site: http://www.squidoo.com/fix-poor-credit/