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collection on your credit report, your #1 priority, above all else, should be to dispute it and fight it until it is deleted. Anything else you do to improve your credit will pale in comparison to correcting that one error. Once again, the fact that these companies can exploit the system so easily is evidence of how stupid and broken the credit bureaus are today.

You should also know that the companies who typically resort to collection agencies are utility companies, phone companies, and landlords. If you miss a due date, call the company to let them know the check is in the mail, because even if the check eventually arrives (and they cash it!) they may already have referred the debt to a collection agency. Once the collection agency has your information, they will not hesitate to destroy your credit and try to exploit you, even if the debt is no longer valid. It is illegal to do this intentionally, so they will feign ignorance and incompetence. It is a huge headache... so just be extra careful to pay those bills on time!

If you have a legitimate bankruptcy, judgment, or collection on your credit report, then you simply have to wait. These things should stop hurting your credit score after about seven years (although there is talk of legislation that may extend this time period, to punish people who exploit bankruptcy law after failed speculation in the real estate market). In the meantime, you should do everything else, suggested above, to improve your credit, so you can emerge from the darkness with a powerful score.

CONCLUSION:
Here are the key points you need to remember:

1) Pay every bill on time, even if it's the minimum payment.
2) It's the balance-to-limit ratio that counts - not the balance.
3) Keep your old cards. Don't open new cards.
4) Don't apply for anything until you're sure you need it.
5) Say "no" to store credit cards.
6) Fight every error on your credit report!

Good luck!

Learn more about this author, Charles Blazer.
Click here to send this author comments or questions.

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