Did you know that many homeowners' insurance companies are no longer even writing policies for people considered to be a high risk of defaulting? Many employers, whether it is fair or not, are now running your credit reports and are denying employment for those who have bad credit. So, even if you're not shopping for a loan, it's of paramount importance that you check your credit regularly. Not checking regularly is the number one mistake consumers make on their credit.

Your credit report includes information about your financial habits, including what credit or loan accounts you have, how much you owe, and if you've been paying on time.

Your creditors, also known as information providers, report the information directly to credit bureaus, the companies who create and maintain your credit report. If the creditor says you were late on a payment, the late payment goes straight to your credit report, no questions asked. This is one of the ways errors can be introduced to your credit report.

Sometimes, it's nothing more than a data entry error on the creditor's part or even on the part of the credit bureaus that can have your scores unexpectedly plummeting. So, it’s up to you to make sure that you check your credit regularly and make sure it’s accurate at all times.

If you currently have bad credit, there are ways you can improve it. Credit repair has gotten a lot of bad press in recent years as a result of unscrupulous companies making promises they can't keep and charging exorbitant rates to unwary consumers. But, there's nothing wrong with credit repair, and it's perfectly legal. Credit repair is nothing more than the process of obtaining your credit reports and writing letters to dispute credit bureau or creditor reporting errors, outdated information and unverifiable information. A successful credit repair campaign could potentially raise your points by as little as 10 or 20 points, or even up to 250 points. Many people end up buying a credit repair kit or partnering with a Credit Repair Company to repair their credit. Some like to do it themselves.

If you decide to do the credit repair yourself, you should first send correction letters to each of the three credit bureaus: Experian (www.experian.com), Equifax (www.equifax.com) and TransUnion (www.transunion.com). It's best if you mail your disputes to them because it generates a paper trail of your efforts. When you mail them, send them certified mail with return receipt requested. Then, you'll know just when the credit bureaus received your dispute. The date they received the dispute is important because if they don't respond within 45 days, you have the legal right to have the disputed item removed from your report. Visit Bad Credit Mortgage Lender online to refinance and consolidate debt for increased monthly savings.

Avoiding Common Mistakes

A common mistake that people make in trying to repair their bad credit is to pay off and close out old accounts. This can actually lower your scores. In paying down or paying off accounts, it’s best to start with the one that’s closest to the credit limit and work your way down. And, it’s better to pay off revolving debt (credit card debt) rather than to pay off installment loans. As long as you are making timely installment loan payments, your credit scores won’t suffer. So, keep making those on-time payments on your installment loans, but knock down the credit card balances. Then, maintain a low balance. Anything over 30-40% of your credit limit will adversely affect your credit scores.

Here are some other common mistakes people make that lower their scores:

• Accumulating too many lines of credit or too many credit cards causes credit report remarks like "too much consumer credit".

• Exceeding limit and having to pay over-limit fees is a negative with creditors and causes "high proportional amounts owed" remarks on credit reports and subtracts credit score points.

• Cosigning for someone else. When you do this, the account also shows up on your credit reports. And, if the person is late or defaults on the loan, it reflects on your credit scores.

• Missing a payment. Payment history accounts for 35% of your credit score. One late payment drops your score like a rock," says Gerri Detweiler, a credit advisor for Credit.com. For a consumer with otherwise good credit, the damage could be more than 100 points. Someone with a credit score of 707 who missed payments one month could see their score drop as low as 582, according to FICO's Score Simulator.