Some of us just haven't been lucky enough to have perfect credit scores, and some of us have been unluckier than others when it comes to credit. However, all's not lost. Did you know there are ways to increase your scores? When you know all these little "how to's" you can sometimes increase your credit scores by 100 points.

A lot of people think that paying off old, delinquent accounts will improve their credit, and the collection agencies certainly want you to keep thinking so. But paying a charge off or a lien after it's over two years old can actually hurt your credit score. Although a charge-off will severely affect your credit, the software that scores your credit looks at the last activity on the credit report to determine what effect it will have on your score. The collection agency will update your report as "Paid Collection" whenever you pay off the account, making the software pick it up as "current". If you're going to pay off an old account, the best way is to insist that the collection agency send you a letter that they will delete the account from your credit if you pay it. Some collection agencies will and some won't, but it will increase your score and is definitely worth the effort.

Past due amounts, however, will totally destroy your score. Any amount in the past-due column on your credit report needs to be paid, or, if it's not owed, contact the creditor and get them to take the amount off. In fact, I would suggest that you pay off any past due amounts before paying a collection agency once your account has reached the charge off stage. Then the software can't pick up any past due amounts. You can call your creditors that have reported late payments, and ask them to remove the late payments in "good faith", but remember politeness is the key. If you're antagonistic toward them, they won't lift a finger to help you, and you want your credit score to increase.

If your credit limit is not being reported, make sure the credit bureau has that information, because an account being reported with no limit gets scored as though the account is at its maximum amount. And, furthermore, the software will penalize you even more when your balance exceeds various percentage levels of your limit on credit cards. These levels are at 30%, 50%, and 70% of your credit limit. If you can, bring your balances below the 30% level for the maximum benefit, and you get a higher score when you have all your cards below the 30%, 50%, or 70% mark, rather than to have a zero balance on two cards and one card over the 70%.

And, last, but not least, don't close any credit card accounts, unless you absolutely have to. Leave them paid off, but open, and use them about once every 6 months. You are scored on the percentage of credit available versus the amount owed. When you close an account, it increases your debt ratio which will decrease your score, because it reports as having less credit available with the same amount of debt as before you closed the account. If you have too many department store cards, you can close the newest ones and leave the older cards open, because the older cards show a long history of credit, because 15% of the credit score is determine by the age of the file.

So don't let your "less than perfect" credit get you down. There are ways to overcome bad credit.

About the author:

Carol Cass has written articles on a variety of subjects. This article on CREDIT SCORES compliments her website which helps people find a MORTGAGE WITH BAD CREDIT.