Got Credit? Here's what you really have to know about your credit.

If you've managed to survive the last two years in adowntrodden economy, chances are you might not have gotten offscot-free. You might have added a few wrinkles to your credithistory by making late payments to credit cards or vendors. So howdo you go about fixing your credit score when it comes time to seekfinancing, get a loan or even open new accounts with vendors?

Most homebased business owners' credit is tied to theirpersonal credit, says Mari Gottdiener, a credit report specialist,credit counselor and founder of Outsource Solutions, a creditcounseling business. Your first step should be to get a copy ofyour credit report and see what your current score is. Creditscores are used to predict the risk that a consumer will default ona loan, and are calculated on a scale of 300 to 900, with anythingover 620 considered acceptable. Most scores fall within the 500- to800-point range, according to Gottdiener. "Credit scoringitself takes into account two things; the first is a consumer'spast history in terms of account payment history, amount ofaccounts open and timeliness of payments. The second is a currentsnapshot of financial obligations," she says.

The first step to raising your score if you're seekingfinancing is to pay down revolving debt to less than 50 percent ofyour credit limit. This raises your score more than paying offindividual cards one at a time, says Gottdiener. So if your creditlimit on one card is $4,000, and you owe $3,000, pay it down toless than $2,000.

Don't open any new credit card accounts, loans or make anymajor purchases within a year of when you hope to apply for a loan.LowerMyBills.com, whichprovides price comparison services to consumers, was able tosurvive an 18-month bad credit spell when the dotcom bubble burst,by not avoiding creditors. "We were very proactive incommunicating with vendors. We were very honest with people,saying, 'Hey, we can't make payments on this, but we dointend to make payments," says CEO and founder Matt Coffin."We changed our own collection policies so we weren'tgiving such generous terms to other companies." Coffin wasable to raise his company's score over a period of 12 months.If you take steps to improve your score, you'll see resultsimmediately. "Your scores are going to go up every day, everymonth," says Gottdiener.

So how can you raise your score if it has major blemishes, likebankruptcy, collections, judgments against you or even a tax lien?It's important to know that tax liens stay on your creditreport until seven years after they're paid off, bankruptciesstay on for 10 years, whether they're paid or not, whilechargeoffs, delinquencies and judgments (when vendors sue you insmall claims court for the amount you owe) stay on seven years fromthe time the accounts first went delinquent, paid off or not. Oncean account goes to an outside collection agency, the damage hasbeen done, and all that's left to do is wait out the sevenyears until it gets dropped from your credit report. Focus insteadon the past 12 months, suggests Gottdiener, and demonstrateexemplary consumer behavior by ensuring that you're current onall your monthly payments. Eventually, your credit will getbetter.