Bad economy makes credit score even more important

The tightening credit market makes keeping your credit score in good shape more important than ever.

Valley credit counselor Dean Wegner said credit limit-to-balance ratio is a big part of the score, and a good way to avoid losing FICO points is to ask all of your credit card companies for a credit line increase.

"For instance, if you have a $5,000 balance with a $5,000 limit, you're 100 percent maxed. If you ask them to increase it to $10,000, now you're at 50 percent max, you're at half, and you're going to get 25 FICO points just from that one activity right there, and it's not going to cost you anything."

No matter how many credit cards you have, you should always have 60 to 70 percent of your combined total credit limit available, Wegner said.

"It's good to have lots of open and active trade lines that are setting there with a low balance. Never cancel any of your credit cards, leave them open as long as you can."

Opening new accounts is a good way to keep your available credit high, Wegner said, adding that you need not worry about the inquiries affecting your score.

"Inquiries are only 10 percent of what makes a credit score," he said, and only the first 10 inquiries of the year even affect your score.

If you're thinking about cleaning up some old debts before applying for a car or a home loan, you might want to wait, Wegner said.

"You don't want to pay off any collections or charge-offs because what that's going to do is attach the most recent date of activity to those accounts and it's going to drag down your FICO score between 30 and 60 points."

If it's a condition for getting a home loan, you should arrange to pay it after closing, he advised.