By YOUNG MONEY Staff
4 April 2011

Having a good credit score is incredibly important, especially if you're looking to borrow money for a car loan or mortgage, among other things. During the recession, the credit scores of many Americans were hurt by their failure to pay the principal on loans they had. As the economy recovers and consumer spending improves, there has been a jump in borrowing again.

Nonetheless, credit scores are often misunderstood by many people in terms of how they're tabulated and how a person's financial history can adversely - or positively - affect them. According to analysts, even little unconscious mistakes can hurt a people's raw credit scores and potentially prevent them from securing a loan.

In some instances, having an unflattering item removed from a credit report can add 40 points or more to your score. If, for example, you have an item on your credit report that you want to dispute, you should contact one of the three biggest credit reporting agencies: Equifax, Experian and TransUnion. Often times if the case you make is compelling, they'll have it wiped off your record - adding points to your credit score and improving your chances of securing a loan.

ABC News reports that many consumers often have similar problem areas on their credit reports that if fixed can help raise your score in the short-term. First, be aware of old bankruptcies as they remain on your report for 10 years; if a bankruptcy is still on your report after 10 years, you should look into having it removed as creditors are very wary of people who have declared bankruptcy.

Moreover, be careful to make sure no outdated lawsuits are on your credit report: If you have paid a legal judgement, it should be removed from your records. Also, take care to ensure outdated demerits like late payments and charge-offs are no longer on your report (they're only allowed to remain on your report for seven years).

Duplicate debts can sometimes make their way onto a credit report so consumers should make sure that doesn't happen. If your spouse has debts that he or she failed to pay before you were married or after your official divorce, you are not responsible for them and you should make sure they're swiped from your report.

It's also important to check that old credit applications where you apply for credit shouldn't remain on your report for more than two years; you should also cite credit for which you didn't apply that's on your report because those accounts can bring down your score.

Of course, the first way to a better credit score is knowing what yours is. If you use AnnualCreditReport.com, you are entitled to request a free credit report once every 12 months from each of the nationwide consumer credit reporting agencies. When you fill out the survey, it'll ask you to pick one or all three of the biggest agencies - through my personal experiences, TransUnion provides the most accurate and fastest report.