华尔街日报的文章很好，值得一读。我把全文都拷来了，给看不到link的同学。

Source: http://online.wsj.com/article_print/SB113236756411202164.html

How to Boost Your Credit Score

Increasingly, Employers, Others
Check Your Ranking; Do You Really Need That Store Card?
By CHRISTOPHER CONKEY 
Staff Reporter of THE WALL STREET JOURNAL
November 19, 2005; Page B1

It might be the most important number you don't understand.

Credit scores -- the arcane calculations pored over by everyone from mortgage 
lenders to auto dealers to decide how much they're willing to trust you to pay
 them back -- are growing in importance as their use spreads beyond traditional
lenders to wireless-service providers, insurance companies, and even employers.

Just this summer, for example State Farm Insurance Cos. Became the latest big 
insurer to unveil a new pricing system that uses a credit-scoring model to assign 
risk and set rates for new auto policies. A survey this year by the Society for 
Human Resource Management found that 19% of employers always do credit checks 
on job applicants, while 24% sometimes do. Last year, the group found that the 
number of employers examining the credit histories of potential employees had 
nearly doubled since 1996.

New uses like these are part of a trend to harness the predictive power of the
 data behind your credit score.

A person's score is basically a snapshot of one's creditworthiness at a particular 
moment, based on a wide array of data: It wraps in information about loans and 
credit accounts, along with a tally of who has accessed the report, as well as a 
list of court documents and other matters, such as bankruptcies, liens or 
foreclosures.

Companies have found that credit scores can be useful as a predictor of, say, 
who's most likely to fall behind on cellphone payments. Some studies also have
 shown strong correlations between low credit scores and other costly behaviors, 
such as car wrecks and fraud.

For consumers, it raises the prospect that even seemingly minor decisions -- for 
instance, should you sign up for a retailer's credit card during the holidays to 
grab the extra discount -- can have potentially far-reaching ripple effects.

As the use of credit scores proliferates, financial-services companies are rolling 
out an assortment of new products and services to try to help consumers track 
their credit score. For example, over the course of the past year, Equifax Inc. 
and Fair Isaac Corp. have partnered on Score Watch, a credit-score tracking 
service that sends emails or text messages to customers whenever their FICO 
score (the standard credit score) fluctuates outside of a set range.

These pitches increasingly are targeted at middle-income and upper-income 
individuals who may be just as interested in guarding against identity theft as 
they are in managing their score. One reason: Many people don't fully understand
 that simply having a big income doesn't guarantee a decent credit score.

The costs of a having a bad score add up fast. Scores range from 300 to 850, 
with 700 or so marking the point below which it can be tougher to get the best 
price on a loan. For instance, on a typical $150,000, 30-year mortgage, a person 
with a score of 639 would face annual payments nearly $2,000 higher than someone 
with a score of 760, according to Fair Isaac, the company that pioneered
 the standard FICO credit score in the late 1950s.

For consumers, this increases the importance of understanding the tricks for 
improving your score. It isn't surprising people are confused by the process. 
For starters, each of the 165 million credit-using American adults actually has
 multiple credit scores, not just one, as the scores are calculated individually 
by the credit-reporting agencies, Equifax, Experian and TransUnion LLC, based 
on closely guarded algorithms. Thus, scores vary depending on the source. 
However, the FICO score is the standard calculation used by mortgage lenders.

The most important way to raise a credit score is a no-brainer: Pay bills in 
full and on time. In fact, your history of making payments accounts for 35% of 
your overall FICO score.

Missing payments or submitting the minimum due each month will lower scores. 
This trap snared Tameka Clark in 2001, when she fell behind on credit-card 
payments and her credit score dropped to 550, pushing her into "subprime" 
territory where interest rates can exceed 10%.

It's important to be vigilant on bill paying, because it can take a long time 
to recover from a slip-up. After four years of sticking to a debt-management 
plan, Mrs. Clark, a 30-year-old Internet consultant, was able to raise her 
score to 680. "Now I'm closer to 6% on a 30-year mortgage," Ms. Clark says.

The second biggest priority for anyone looking to bump up their score is to 
maintain a low "credit utilization" level. This refers to the balance-to-limit 
ratio on credit accounts, or the percentage of available credit being used for 
each card. The credit-utilization level falls under a complicated category 
referred to as "amounts owed," which comprises 30% of the FICO score.
 
In plain English, maxing out credit cards will send a score plummeting. In fact, 
simply using 50% or more of a limit can cause problems. For example, for a 
consumer who has four credit cards with a $2,000 credit line on each, it isn't
 wise to carry a balance of more than $1,000 per card. In other words, it's 
usually better to carry smaller balances on several cards than to pile everything 
onto one card.

The third-most-important strategy, which makes up 15% of the score, is to build 
up a lengthy credit-using history. This means it's usually better not to close 
out all those old cards, as keeping them open adds to the credit record. 
Moreover, keeping otherwise-dormant accounts active will help lower the balance-
to-limit ratio, as the limits are factored into the credit-utilization formula
. Time, in this case, is literally money, which gives older adults a built-in 
advantage over high-school graduates.

The final 20% of the score is divided equally between two categories: new 
accounts and diversification. Unlike keeping old accounts open, taking out new 
lines of credit raises red flags because it makes the consumer look riskier. This
 is why it's best to avoid those retailers' cards during the holidays. (Unless, 
of course, a temporary decline in credit score is no big deal.)

Consumers get credit for having a variety of loans, so it's better to have an 
assortment, including installment plans like auto loans or mortgages, than just
simply credit cards. That seems counterintuitive -- after all, shouldn't fewer 
loans make you look better to prospective creditors? The answer, in short, 
is that creditors feel that consumers well versed in a variety of credit types
 pose a lower risk.

As credit scores are based on information in credit reports, it's important to
 check reports to make sure they're accurate. Often, credit reports can omit 
important bill-payment information, and sometimes they contain errors or accounts
fraudulently opened by an identity thief. Information about obtaining free 
copies of credit reports can be found at www.annualcreditreport.com1. Be warned: 
Correcting errors requires patience, follow-through and lots of correspondence.

However, mortgage applicants who are in a hurry have a tool to bypass some of 
that headache. It's called "rapid rescoring," a process in which a mortgage 
lender contacts a credit bureau to quickly correct erroneous information on a 
credit report.

The idea is to produce a new, hopefully higher, credit score within a few days. 
Rescoring can cost as much as $50 per scrubbed account, which is typically 
absorbed by lenders, but it can end up saving a consumer thousands of dollars 
on a loan. For Maria Chiacchio, a Colorado resident who rescored in October to 
secure better terms on a mortgage, it was worth it: The process raised her 
credit score by 75 points in less than a week.