Your FICO Score

If your FICO score is at least 720 -- the national median -- ­there's no need to go overboard futzing with it. You already qualify for the best interest rates. But if you're below that, it's a different story. A small increase in your score can make a huge difference to your pocketbook.

Take the average interest rate on a fixed 30-year mortgage. For consumers with FICOs of at least 720, it is 5.53 percent. Knock 50 points off that score and the rate zooms to 7.34 percent. That's an

extra $85,511 over the life of a $200,000 loan.

Thankfully, there's much you can do to boost your score - even if it's just temporary in some cases. Here, the main factors that make up your score, and how to work them to your advantage.

Your payment history. Don't pay late, don't go bankrupt, and you've got this area covered. But if you do have a late notice on your credit report, you can:

• Ask the lender who reported the item to remove it - a "goodwill adjustment;" in industry parlance. Explain the special circumstances behind your slipup, and tell them it will never happen again. "Beg' and be sweet;" says L:A. mortgage broker Les Berman. "It works."

• Dispute the notice. This means writing to the lender to demand evidence supporting the bad report. While the item is in dispute, it will stay on your credit report but won't factor into your FICO score. Some consumers have used this tactic to boost their score just before applying for a loan. But it can backfire. If the lender examines the full report and notices the dispute, there’s a chance it’ll refuse the loan until the issue is resolved.

Current credit use. FICO scores reward consumers who use very little of their available credit.

• Never use more than 50 percent of your limit on any single credit card - even if you pay off your balance every month.

• Find out what day your card issuer reports to the credit bureaus. It's usually the day after your statement period ends, but you can tell for sure by monitoring your report closely. To run up your score temporarily, pay the balance off before that date. This creates a zero balance-to-credit-limit ratio, a big score booster. If you don't have the cash, a well-timed balance transfer can accomplish the same end. Just before your card issuer reports your balance, transfer it to a second card that won't be reporting for a few weeks. Then, after the first card's balance is reported as zero, transfer the entire balance back before the second card reports. The downside: Depending on your cards’ fees, yo may have to pay up to $50 per transfer.
• Instead of reporting your credit limit to the bureaus, some card issuers (Capital One is a notable example) substitute "high balance" - the largest sum you've ever carried on the card. This can hurt your score. Say the card's credit limit is $10,000, your high balance is $1,500, and your current charges total $1,000. Based on credit limit, your credit usage is 10 percent, a score booster. But based on high balance, your usage is 66 percent, a score killer. If one of your issuers is reporting only the high balance (check the credit limit column on your credit report), use that card exclusively one month to run up a new, loftier high balance. It will hurt your score short-term but boost it in the long run.

• Even if you have a credit card you seldom use, think twice before closing the account. Losing the line of credit will increase your overall credit usage ratio.

Credit history and applications for new credit. The older your average account, the better for your score. Lots of new credit, on the other hand, makes lenders queasy.

• If you have too many credit cards - generally, more than five - close the newest accounts first. And to up the score-boosting power of the older ones, use them - at least once a year. Dormant' accounts don't count for much.

• Hold off on applying for smaller loans or credit cards within a year of applying for a big loan, like a mortgage. You don’t want them dragging down your score.
• Find a friend or family member willing to add you as an authorized user on an old credit card account in good standing. The account will appear on your own report and boost your score.
• Avoid inquiries. Every time you shop for credit, the lender will peek at your credit file, creating an inquiry on your report. And inquiries can hurt your score. So if you're just sniffing around for a rate quote, supply your own copy of the report to the lender. If creditors insist on pulling the report themselves, do all your shopping within a 14-day period. A quick flurry of inquiries counts as only one.

Credit mix. The FICO formula rewards a diverse debt portfolio. It's far better to have mortgage, auto loan and several credit cards all in good standing than just credit cards alone. And when it comes to cards, three to five is often cited as the optimum number. Loans from finance companies, however, can drag down your score. Avoid them.