• Check your credit report at least once a year.credit 3d sign image by onlinebewerbung.de from Fotolia.com
  
  Credit problems can lead to a low credit score. To repair your score, one of the first things you want to do is obtain a copy of your credit report at AnnualCreditReport.com and dispute any errors. According to Fair Isaac Corp., the creators of the FICO scoring model, your FICO credit score is broken down into five separate areas. If you focus your rebuilding efforts on these key components, you can increase your credit score.
  
  

Pay Your Bills on Time

• How you pay your bills represents the largest portion of your FICO credit score calculation, accounting for 35 percent. Late payments lower your score, and the later the payment, the more it damages your score. Creditors consider a 120-day-late payment differently from a 30-day-late payment. To help repair your score, make at least the minimum payment each month on all credit obligations. If you're having trouble making payments, contact the creditor ahead of time to see if you can work out a payment schedule that will allow you to keep the account current.
  
  

Pay Down Your Balances

• Thirty percent of your score reflects the total amount of outstanding debt that you owe. Your FICO score looks at how much credit you have versus how much of that credit you're using at any given time. The less of your available credit that you use, the higher your score will be.
  
  Pay down your balances across the board. Reducing the debt on installment loans, such as a car or home loan, will decrease your overall debt load and increase your score. Conversely, if you max out your credit cards, you will exceed the amount of available credit for that account, and this will cause your score to drop.
  
  Also, be careful when it comes to balance transfers. This allows you to move the debt from one account to another, but it doesn't eliminate the amount of the debt. In fact, depending upon the balance transfer offer, if you fail to pay the transferred balance off within a certain time frame, your interest rate will go up, and this will cause that debt to increase. The goal is to pay the debt off, not just move it around.
  
  

Limit the Accumulation of New Credit

• Ten percent of your FICO credit score reflects how many new credit accounts you incur. FICO encourages the attainment of new credit, but only in moderation. Applying for too many new accounts at once is considered risky since it often indicates the borrower is experiencing financial trouble. Each time you apply for credit, it places a new inquiry on your report, and this lowers your score.
  
  Also, another 15 percent of your score reflects length of credit history. Every new account shortens the average length of your credit history, and this will hurt your score. The longer the credit history, the higher your score.
  
  The final 10 percent of your score represents the types of credit you have. FICO prefers that you have a mix of installment loans and revolving credit. Still, it doesn't encourage consumers to run out and take on new debt just to have a better credit mix. This could backfire. Only apply for new credit when you actually need it, and not just to save a few dollars at the store checkout counter.