Credit score or FICO score plays an extremely important role when you make up your mind to obtain a loan. Before rewarding you a loan most lending companies verify your credit score. And it depends mostly on your FICO scores whether you are rejected or not. However, most individuals do not even know their current credit score, which is quite sad.

You have the right to have your FICO report once a year. Do not miss this opportunity because it allows you to see all the entries on your FICO report from the 3 major FICO reporting agencies. In case you detect some errors or derogatory entries (entries that reflect some sort of negative payment activity in your past), that you question, you are entitled to get them removed.

Follow these tips if you want to increase your credit score:

1. Ask for a copy of your FICO report. To make this you can either call one of the three major reporting agencies or just do a Google search to get information on how to get your current report.

2. Try to have all the derogatory entries removed. Derogatory entries reduce your FICO score so it is your primer interest to get rid of them. You can do this quite easily. What you need to do is to check the list of all the entries on your FICO report and look for derogatory entries. If you feel that some of these entries are incorrect, contact the company that reported the derogatory entry and ask them to document it. Most companies simply will not take the trouble to spend their time on documenting this derogatory entry. So, if company does not document it the credit reporting agency is obligated to remove the entry from your report. This is a quick way to increase your credit score.

3. Do not allow your score to be easily reduced. Every time you make an enquiry, that involves borrowing money or purchasing items on a payment plan, to the 3 major reporting agencies, your scores are reduced. Though the reduction is quite small it becomes significant over time. If the number of enquires is large it can negatively affect your score because the reporting agency may think you have financial problems. You already know what to do in such cases. You can find out who made the inquiry, on what date, and there should also be contact information for the company. Contact the company that made the inquiry and ask them to make documentation for the inquiry. If they do not do this, the credit reporting agency will remove the entry and your score will increase.

4. Make annual reviews. By doing so you will soon realize that your score either remains stable or even improves over time. People with low scores (600 or below these days), will have a lot of trouble borrowing money at all when the economy is in poor shape, as it is now. Even if they are approved for a loan they will have to pay extremely high interest rate.

So, the better your score is, the more advantages you have. That is why it is very important to use all the tools and learn as much as you can about how to increase your score.