If you think you have good credit, think again. Chances are there is something on your credit report that can effect your credit rating; this type of news is particularly alarming if you are shopping for a loan or applying for credit. You can save yourself headaches as well as thousands of dollars by implementing the following seven credit improving steps.

1. Do not charge your cards to the limit. Yes, your credit line is whatever the credit card company determines it should be. Still, if you max out your credit cards your credit rating will suffer.

2. Check your credit reports. The three major reporting agencies are TransUnion, Experian, and Equifax and they all must offer to American consumers one free credit report per year. Not all states are covered by this policy until September 2005, so check to see if you are eligible now. Errors are common, so make sure you identify them and take the proper course of action to have incorrect information expunged from your report.

3. Pay off your credit cards. Your credit will improve if your outstanding balances are paid off especially before you apply for credit. Consider consolidating your outstanding balances into one low monthly payment.

4. One stop rate shopping. Too many mortgage applications over a lengthy period of time can reduce your credit rating. Best bet: shop online and get the mortgage companies to bid on your loan. Choose one company and only apply to them.

5. Use reputable lenders. If you borrow money from less than reputable lenders, including some finance companies, you may be penalized even if you have repaid the loan. Using a finance company can be a signal to lenders that you are a credit risk.

6. Wait to purchase household goods. If you are planning to purchase major appliances for your new home, do not make the purchase until after your loan has been approved. A spike in spending could derail approval of your mortgage loan.

7. Overcome a history of bad credit. If you have a previous history of bad credit, do not apply for any loans within the first year immediately after your credit rating is at its lowest. You will need the one year period to build your credit rating back up. Should you apply and are accepted within that first year, chances are your mortgage rate will be higher and that could cost you thousands of dollars over the life of your loan.

Lenders are eager for your business, so even if your credit rating isnt that great you may qualify for a lower rate mortgage especially if other factors weigh in, like your income level. Still, consider taking whatever steps necessary to improve your credit rating before you apply.