Many failing credit test

Avoidance is never the best policy

The best way to improve one's credit score is by always paying bills on time. The higher the score - typical range is 300-850 - the better. Just 28 percent of Americans knew that a credit score of at least 700 is generally required to qualify for a low-rate mortgage (a 760 score may result in even lower rates).

More than a third did not know insurance companies often use credit scores to approve coverage and set rates. Less than three-fifths knew that regularly maxing out a credit card, even if paying bills on time, lowers credit scores.

In addition, 79 percent believed incorrectly that credit scores are available free once a year. That's true of credit reports only (see www.annualcreditreport.com). Consumers generally have to pay for their scores, about $15 each.

"Consumer advocates fought very hard" for free credit scores, said Stephen Brobeck, executive director of the Consumer Federation, but the law Congress passed in 2003 provided for free reports only.

Still, in addition to checking their reports once a year for accuracy, consumers are generally advised to check their scores perhaps every couple of years, or before they apply for a mortgage or other large line of credit. Washington Mutual estimates consumers can reduce finance charges by $105 a year on average by raising their scores 30 points.

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Humberto Cruz writes for Tribune Media Services.