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If you’re really determined to improve your credit rating, then you should check your current standing with all three of the major credit rating agencies, Experian, TransUnion, and Equifax at least once a year, because hard as it might be to believe, more than one third of all credit reports in the U.S. contain errors and many of them are major ones.

When you request your credit reports, be certain to specify that they contain credit scores, because without them, they’ll be virtually useless, and also be aware that 694 is an average score and that below 600 means that you have a poor credit rating.

You’ll hopefully never see the lowest credit score which is 300, and although I’d love you to receive a credit score of 750 which is the best that’s currently available, be very thankful if yours is 720 or above, which is excellent.

If you find errors in your credit report, which is highly likely, then dispute them as soon as possible by sending the credit agency in question any details and copies of documents that you believe might help.

Send the documents by certified mail, and be aware that apart from the postage that there should be no additional cost involved because all of the major credit ratings agencies offer a free credit report.

Here’s How To Improve Your Credit Rating

Fortunately, the main contributing factor to a bad credit rating will most likely be the easiest to fix, if you’re determined to do it.

The number one thing that you’ll need to do, will be to reduce your debt-to-credit ratio which in the simplest of terms, means reducing as many as possible of your debts, across all open lines of credit.

Your debts should never amount to more than 80% of the ongoing credit that you have available at any given time, and if you can reduce it to 50% then you’ll be well on your way to having an excellent credit rating, because reducing debts improves a credit score faster than anything else.

Pay special attention to reducing the number of small retail credit cards that you have, such as JC Penny, Sears and Lowe’s etc because those types of cards cause far more damage to your credit rating than the major credit cards like Master Card and Visa do.

Once things are somewhat under control, and your credit rating starts to improve, you should contact all of the companies that you owe money to and start reducing your indebtedness. It doesn’t matter if you do this extremely slowly, but be consistent, and once you’ve made a few payments, try to see if can reopen an account.

Paying down your debt and getting accounts reactivated will have a hugely positive effect on your credit rating and it will be worth any ‘goodwill deposit’ that you might have to pay.

If at some point you’re in need of a new loan or loans, then check your credit rating online, and try to make certain that the loan will be approved before you submit the application.

You can do this by asking right up front, “What are my chances of getting this loan, with my present income, and with the credit rating that I now have?”.

The idea here is to keep the number of credit card inquiries on your report to an absolute minimum.

An official that administers the ‘Troubled Asset Relief Program’ recently wrote to twenty banks including Citigroup Inc. and Bank of America Corp requesting details of their purchases of mortgage-backed and asset-backed securities.

The reason for the letters is that the U.S. Treasury is under pressure to revive lending but wants greater clarification of what was done with the monies that were already doled out to the banks in question.

In particular, the Treasury wants specific information on first time mortgages, home equity and credit card loans as well as a summary of other types of consumer lending and the requested data also includes commercial real estate lending and consumer and industrial loans.

As was anticipated, Treasury Secretary Henry Paulson’s is already becoming a scapegoat and aides close to Obama are already accusing him of lack of transparency and of not having done enough to get additional credit flowing through the system.

Obama advisers are already calling for more accountability from banks that received taxpayer money and David Axelrod who is Obama’s chief political adviser has already stated that the new team will manage the TARP (Troubled Asset Relief Program) in a “much different way” and amongst alternatives under consideration are the setting up of a government-backed bad or aggregator bank to hold the securities, or leaving the assets on banks’ books and providing a government guarantee.

Lawrence Summers, who is the director-designate of the ‘National Economic Council’ had this to say when interviewed on CBS’s ‘Face the Nation’, “Anyone who looks at it has got to be disappointed when they look at what’s happened to lending, has got to think the results have been unsatisfactory”.

However Kashkari is on record as saying that, “As long as confidence remains low, banks will remain cautious about extending credit, and consumers and businesses will remain cautious about taking on new loans but as confidence returns the Treasury expects to see more credit extended”.

The bottom light might be however that even though pressuring banks to increase lending runs the risk of encouraging more bad loans it would seem that borrowers might need to be encouraged too because if they don’t borrow then the banks will fail.

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