In a tough economy most people are thinking of ways to tighten the belt buckle, spend less, and save more.  One of the best ways to start is by improving your credit score.

By improving your credit score you can lower what you pay each month on your mortgage, credit cards, and car loans.  You can also use your good credit to acquire new money for home repairs or to start a business.

So, where do you start?

The first thing that you need is to know what is on your credit report.  There are many services where you can sign up online and view your credit report and scores from the three major credit bureaus.  Most of these services charge a modest fee for this service, usually around $25 or so, but it is worth its weight in gold to get instant access.

Once you have copies of your credit reports, you should look for errors.  And when I say errors, I mean just maybe you weren’t really late paying that credit card bill last year and therefore, you should dispute it.  In fact, dispute every negative listing on your reports that you are unsure of.  You can dispute the contents of your credit reports by going to each of the three credit bureaus’ websites.

While you are waiting for the results of your disputes, you should be working on new accounts.  Your credit scores will not improve unless you have positive revolving accounts.  Not all credit will help you achieve a better score, so stick with Visa and MasterCard credit cards.  If your credit is so bad that you can’t get approved, then you should consider a secured credit card – you open a savings account and the balance gets held  as security.  You are then issued a credit card with a abalance that matches your initial deposit.

Now the important part – keep your credit card balances low.  The credit scoring systems put great emphasis on the available credit percentage that you have.  It is best to keep your balances at or below 25 percent of what your credit limits are.

Improving your score will not happen overnight, but it is important to start now.  Just think about how much you would save if your mortgage rate went down three or four points or you were able to get that car payment split in half.