Have you ever received one of those emails from your friends that sound too good to be true? Like the one where you can help lower gas prices if you stop buying from one of the big name oil companies? Or if you add your name to the bottom of the list and send to 10 of your friends that Microsoft will donate money to charity and end world hunger?

They sound good. But the reality is that most of them are nothing more than a myth (well, they're also a big pain in the neck, too!).

The "cyber world" is full of myths. Some are fun to believe in. Some can be dangerous to your (or your computer). But the lesson here is that you should NOT believe everything your read online.

A few years ago I was struggling with debt. I tried everything to get out of it. But nothing worked. So after months of research, I decided to use the controversial method known as "debt settlement". You can argue whether you like it or not. And you can easily get ripped off if you're not careful. But for me, it was the right solution at the right time.

But everything I read said that debt settlement will ruin your credit until the end of time (ok, it actually said that it would ruin my credit for 7-10 years, but for some people that can seem like a lifetime).

Being the skeptic that I am, I looked into credit repair. I went to the library and local bookstores. Read lots of horror stories online about people who signed up for various types of debt relief and ended up ruining their credit (and there were lots of them). And read lots of information on the Internet from all the "experts" who said you absolutely could NOT get this stuff removed from your credit report, unless you waited 7-10 years.

And despite the fact that there was apparently no chance it would work, I decided to give it a shot. On my own. Using a simple book I found in a bookstore.

And much to my surprise, within about 18 months, my credit was back to normal!

I didn't do anything illegal.

I didn't do anything unethical.

And I'm certainly no legal expert with special skills.

So all this "crap" I read about ruining my finances by using debt settlement was actually a myth! Well, it is true - if you sit back and let it ruin you. But there are ways to fix your credit without doing anything even close to "shady" or evil or devious.

You may think, "well those are the rules and you just have to play by the rules and wait 7-10 years for your credit to fix itself". And if you do, I commend you.

But at the same time, when I asked the credit card companies for help during my darkest days, they refused.

And trust me, I'm one who always plays by the rules. I always stop at stop signs. I always put on my turn signal. I'm neat and organized to a fault. But I just happened to feel that those credit rules were fair. And to get clean up my credit, it only took one simple action - all I did was ask for the bad credit to be removed. I didn't lie. I didn't cheat. I just asked (the key is HOW you ask).

Here are the 5 truths (and myths) I learned the hard way about fixing credit problems:

1) All bad credit MUST remain on your credit report for 7-10 years. If you sit back and do nothing that is correct. But it doesn't have to stay there that long. You just need to ask the right way to get them removed.

2) And you can't get bad credit removed unless the information is wrong. If anything on your credit report is wrong, you should have it corrected. But even if it is not wrong, you can still ask to have it removed. And if the credit bureaus can't verify it (which I learned that they often cannot) they have to remove it. Nothing unethical at all.

3) Debt relief programs will ruin your credit. If you've got so much debt you can't buy groceries without using your credit cards, then you probably need to focus on getting out of debt, and worry about your credit later on. And if being out of debt improves your life, it will be worth it.

4) You need to hire a lawyer or repair company. These companies might work. But even it they do, they're expensive. And they won't do anything you can't do on your own. If you do decide to use a professional company, make sure to check them out very carefully.

5) Credit repair is unethical - after all, if you messed up, you deserve to pay. True, to some degree. But is charging 20-30% interest, or more, ethical? And is giving another credit card to someone struggling to pay the ones they already have ethical? No. So asking the credit bureaus to remove bad credit isn't unethical either.

So if you've had credit problems in the past, you can do something about it. It takes some effort. There are no "secrets" involved. Just a few well-written letters, and a little persistence. And you can take charge of your finances too!

Have you ever wondered what makes your credit score go up? What makes it go down? And what really has no effect at all?

Then check out this free booklet from MyFico.com, Understanding Your FICO Score. When people say "credit score" it can really mean one of several different types of FICO scores, all slightly different. So it's a good idea to know how it is calculated. And how to make it as high as possible (with credit scores, high is good).

Unfortunately, many people think they can't do anything to change their credit score. But that's not true. Because your credit score is dependent on many factors. Such as:

• payment history (late payments lower your score)

• how much you owe (the more you owe, the lower your score - most people don't realize this)

• how long you've been using credit (so keep your old accounts)

• new accounts (too many new accounts are a "red flag" and lower your score)

• types of credit (shouldn't be all credit cards)

So even if you've had problems paying on time, you can still raise your credit score.

• The #1 goal should be to pay your bills on time - come up with a system so you make payments on time. There's nothing worse than getting penalized because you forgot a payment. If you do, call your lender right away, and ask for them to help you get current, and remove any late fees.

• Then, stop applying for more credit, especially if you will be getting a loan for a major purchase. Shopping around is OK. But not if you do it all the time. And not if you keep getting more and more credit.

• And try to pay down your existing debt as much as possible. You'll pay for a high amount of debt in several ways - higher interest rates, lower credit score, more likely to miss payments. Pick one account and try to pay it off as quickly possible. Then move on to the next account. And keep going. This is called debt snowball.

• Don't close old accounts, either. Having old credit is good. And having unused credit is good too. So unless there's a clear reason, keep those old accounts open.

And then there's credit repair. Which gets a bad rap, but can work if done right.

First, you need to get a copy of your credit report from www.AnnualCreditReport.com. Then make sure everything on there is accurate. If not, dispute it.

And there are ways to get even legitimate credit problems removed from your credit report (and you don't need to do anything illegal, or even "shady". You just need to know how to ask). There are lots of credit repair companies out there that will charge you a lot of money to fix your credit problems. But most people can do it themselves. It's not hard. A simple credit repair manual can help you learn how to do it yourself.

To get your free copy of Understanding Your FICO Score click here. Have any other good credit repair tips or resources you would like to share?

I get asked this question a lot. The credit bureaus (and a lot of the so-called experts) will tell you that you just have to sit back and wait 7 years for bad credit to fall off your credit report.

Sorry, but this is not true.

The key is to know which factors influence your numbers so you can make better financial decisions:

1. Your payment history (approximately 35% of your score)
Have you paid your credit card bills on time? If not, then late payments, collection accounts, and other negative items can lower your credit score. So pay on time as often as possible!

2. How much you owe (approximately 30% of your score)
FICO scores look at the amounts you owe on all of your accounts. Also factored in are the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit, the lower your score will be.

3. Length of your credit history (approximately 15% of your score)
The longer you've had credit the better. So, closing older accounts is not always a good idea. It is still possible to get a good score in a short period of time - if you've been responsible (by paying on time and not maxing out all of your credit).

4. New credit (approximately 10% of your score)
If you have recently applied for or opened any new credit accounts, this will have an affect on your credit score. So don't keep applying for credit every time you go shopping. And if you are making a big purchase, do your applications in a short period of time, and don't drag out your search for the best rate over a long period of time.

5. Other factors (approximately 10% of your score)
Other factors also can influence your score. For example, having different types of credit on your report (such as credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit) is normal for people with longer credit histories and can slightly improve your score.

How can you improve your credit score?

First of all, credit scores are not always perfect! Since your credit scoring relies on information found in your credit report, it may not be entirely accurate (since many credit reports contain errors). So, it's a good idea to get a copy of your credit report once a year, look it over, and make sure it is accurate.

And if you are planning a big purchase, do this a few months ahead of time so you have enough time to get the errors corrected.

P.S. Thanks to Couple Money for including us in their recent blog carnival.

With the recent mortgage crisis, Fair Isaac (who makes the popular FICO credit score used by most lenders) will be using a new system for calculating credit scores this year, called FICO 08. Here's an article from the Wall Street Journal that explains the new credit score better:

Basically, if you've only had a few "blips" on your credit report, your score might improve a little. And if you're a "repeat offender" it may go down a little.

But does your credit score really matter if you're trying to get out of debt?

I've heard this statement many times over the years from people struggling with debt: "I want to get out of debt, but I don't want to do anything to hurt my good credit rating."

That's what I used to think, too. Then when I had enough, I just said "screw this, I'll get out of debt first then fix my credit later". Guess what? It worked.

Hey, if you have a lot of debt, and have had any trouble paying your bills in the past, you've already hurt your credit - sorry to tell you. So there's no sense worrying about good credit when you've got too much debt in the first place (and isn't good credit only important when borrowing more money and getting further into debt?)

I know, it's the American way to keep borrowing, keep spending, and keep buying - even when you can't afford something.

And I realize most people have future plans, like buying a house, and don't want bad credit to get in the way.

So, you'll need to decide for yourself:

- Is it more important for you to do whatever it takes (including hurting your credit) to get out of debt?
- Or is it better for you to be safe, and protect your credit while getting out of debt?

Kris

UPDATE: I just read this article on FICO scores - it's from a marketing newsletter I read, so you may not enjoy it, but it is eye opening!