Step 1: Order Your Credit Reports and Scores
There is a new federal regulation requiring the big three credit bureaus-Equifax, Experian and TransUnion to provide a free credit report every year. Be sure to use the FTC website, annualcreditreport.com as there are many offers out there for free reports that are not really free. You can also call 1-877-322-8228 for your free report.

Credit Bureaus:

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
www.equifax.com

Experian
P.O. Box 2104
Allen, TX 75013-2104
(888) 397-3742
(88) EXPERIAN
www.experian.com

Trans Union Corporation
P.O. Box 2000
Chester, PA 19022
(800) 888-4213 (to order a copy of your credit report)
www.tuc.com

Step 2: Verify the Data Being Reported
It is the consumer's responsibility to verify that the data being reported to credit bureaus is accurate.

Step 3: How to Improve Your Credit Worthiness (from suzeorman.com)
Your credit score is a "snapshot" of how risky you appear to be at any particular point in time. The snapshot changes as new information is added to your bank and credit bureau files. That's good news for consumers with less-than-perfect credit: Even if you've mishandled credit in the past, you can gradually improve your credit worthiness by handling credit more responsibly now and in the future.

The best and fastest ways to improve your credit worthiness are to pay all bills on time, pay any delinquent bills, and lower your total credit card debt.

• No matter how many cards you carry, it's a good idea to keep the ratio of outstanding balance to total available credit as low as possible. Credit scores look at how much of your available credit you've used. When you're close to the limit, you look out of control. From a score-lowering perspective, debt reduction should start with the cards on which you're closest to your credit limit (though from the point of view of shrinking the overall amount of your debt, it's best to pay off your highest-interest-rate cards first). Be aware, however, that paying off a collection account or a judgment will not remove it from your credit report. It will stay on your report for seven years.
  
• Research shows that consumers with longer credit histories have a lower risk of default than those with shorter credit histories. However, even people who have not been using credit for a long time may get high scores, depending on how the rest of the credit report looks.
  
• Don't close unused credit cards as a short-term strategy. In fact, owing a fixed amount but having fewer open accounts may lower your score. Conversely, don't open a number of new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower your score.
  
• Every time someone requests your credit report from a credit bureau, an "inquiry" notation is made in your file. Too many inquiries on your credit report can signal looking for new credit and may lower your score. You should apply for credit only when you need it and wait before applying for more. FICO scores can usually identify "rate shopping" in the mortgage- and auto-lending environment, so that you are not penalized with multiple inquiries related to one credit transaction. To be safe, it is a good idea to do your rate shopping for a given loan within a short period of time. (Note that if you order your credit report from a credit reporting agency to check it for accuracy, it will not affect your score, as it is not an indication that you are seeking new credit.)
  
• Someone with no credit cards tends to be a higher risk than someone who has managed credit cards responsibly. Still, it is not necessary to have one of every type of account, and it is not a good idea to open credit accounts you don't intend to use.
  
• You don't improve your credit worthiness by carrying balances forward from month to month (as opposed to paying each bill in full), but lenders may be more likely to offer credit to people who carry balances because they have a history of paying interest on their accounts.
  
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. (To find a credit counselor near you, call the National Foundation for Credit Counseling at 800-388-2227 or look for them on the Web at www.nfcc.org.)

Step 4: Dispute Inaccuracies Immediately
Send letters of dispute to the credit bureaus to have errors on your credit reports corrected.

Send copies of the letters to creditors who are reporting the inaccurate information. By law, the credit bureaus have 30 days to investigate claims and make any appropriate updates.