In last month’s blog entitled “Become and Remain Credit Worthy”, I wrote about the importance of getting and maintaining a good credit score.

With kids getting ready to go back to school, and some maybe heading off to college, this is a time of year when some people tend to overspend and do damage to their credit. Going back to school is second only to the holidays when this kind of overspending happens in families.

I understand the desire to make sure your kids have everything they need for their education. And I understand the great importance of protecting your credit rating even if it means scrimping a little on the kids. More importantly, if you have a kid going off to college, it’s critical to teach them the responsible use of credit. They will mirror your own behavior.

Having a good credit score is like getting a high SAT score. It opens doors easily when it comes time to buy any large item like a car, a home, or a business.

Even if your credit rating has dropped due to unforeseen circumstances such as bankruptcy or foreclosure, long-term unemployment or illness, you can take certain actions that will help raise your credit score.

By implementing the actions below and teaching your young adult children to live by these actions too, you’ll increase your chances of eventually making it into that top score range whether you are just starting to build your credit or are recovering from a financial setback.

First of all, you’ll want to get a copy of your credit report as I mentioned in last month’s blog. You’re entitled to get a free copy of your report from all three reporting agencies—Equifax, Experian, and TransUnion—once a year. I recommend making this an annual habit.

• If there are any mistakes on your report, inform the appropriate credit agency immediately. Do this in writing, and document it well.
• Pay all your bills on time. A single late payment on a credit card can lower your credit score.
• Budget for credit card payments the same way you budget for mortgage and food.
• Be careful not to allow balances on credit cards and other revolving debts get too high, as having a high credit debt-credit limit ratio can lower your credit score.
• Don’t close your current accounts and don’t open new ones, as both these actions can lower your score.
• Put as much money toward your high-interest rate cards while paying minimums on the rest. When you’ve paid that card off, apply the same process on the card with the next-highest rate. Whenever you can pay more on your card, pay more.
• Try to keep an emergency fund so that you are always able to pay your minimums.
• Politely ask your credit card issuer for a lower rate. It’s worth a try, even if they say no.
• Use your credit cards rarely and judiciously to demonstrate that you can borrow money and pay it back responsibly. The credit bureau can’t gauge your ability to pay a debt back if you never borrow.
• Maintaining a stable job and residence goes a long way towards demonstrating stability to lenders.
• Religiously avoid collection agencies and judgments against you. Check and check again to make sure you have satisfied liens and other judgments that may be over you.

When you become credit-worthy again, shop for your next credit card as you would shop for groceries and clothing, searching for the best deal.

And remember, you don’t have to achieve the highest possible credit score. Some people become obsessed with reaching that 850 score. Don’t even think about it. That score doesn’t gain you any greater privileges than a score in the 700-range. Just shoot for the highest possible score for your life and circumstances.