Tackle Credit Card Debt

• If you own any maxed out credit cards or balances that come close to it, work out a strategy to pay down as much of that as possible. A single maxed out credit card could cost up to 45 points, because the credit score algorithm factors in your available credit limit on all of your cards and individually -- called credit utilization ratio. You can kill two birds with one stone by signing up for a card with zero percent interest on balance transfers for the first six to 12 months and put the old balance on the card with the teaser rate. Just make sure you can pay it off before the introductory rate ends, because you may end up paying more in finance charges if the new card has a high rate after the promotion finishes.
  
  

Collection Accounts

• Paying charge-off and collection accounts usually does not affect your credit score, but improves your creditworthiness in the eyes of lenders. There is one exception: eliminating large charge-off accounts or collections lowers your overall outstanding debt balance. Agree to pay the entire balance and the creditor or collector might remove the account from your record if you can bargain for it. At the bare minimum get the creditor to report the account as "paid as agreed." Settled accounts just hurt your score.
  
  

Dispute Negatives

• Pull your free reports from all three agencies via AnnualCreditReport -- any place else and you must pay for your report. Look for false data, even if it seems minor like an incorrect balance. Gather as much evidence as possible and submit a claim through the agency's online dispute form or certified mail. The agencies have 30 days to withdraw or reaffirm the item, but you must also account for the time it takes agencies to update their database and a possible lengthy battle if they continue to report the false item.
  
  

Considerations

• The best thing you can do for your score is to keep paying your current debts on time. Opening new accounts to build history works best for people with poor scores. The FICO model factors in the average length of your accounts, so if you have plenty it may not be the best decision to take on more debt. Also, doing nothing but paying promptly might improve your score more than anything else, because negative data recedes in importance over time and some lenders only look at the past two years of history, according to BusinessWeek.