art of understanding credit is to realize there is some pain associated with it. Usually it is your interest rate, especially from credit cards. Plus, how quickly things can happen when you don't make the payments.

Long worded agreements, required for loans and credits, are often never read or understood. We are sad to say our legal system requires companies to use excessive language covering every conceivable point. These long worded agreements are more designed for debates in court, as opposed to, simply laying out terms and conditions the average person can read in a short period of time.

Problem is, most don't read these agreements. YOU MUST KNOW THE PAIN BEFORE YOU SIGN. Yes, it's time consuming, hard to understand and boring. But, it is highly recommended that you have this discipline.

That is the first step.

The next step is to understand who can report pain (negative information) to your credit report. Generally, it is anyone who sent you a bill, whether it's by mistake or not. It usually doesn't matter if you received the bill or not.

There are usually two ways negative items are reported on your credit report. There are those companies with which you have a regular monthly payment with.They report often, usually every 30 days. Then there are those who report just once. These are almost always bad ones. Examples are, collection accounts, a new creditor who has purchased your old unpaid debt from a doctor's bill, an old utility bill you thought was paid off, or the phone company bill for $145 you forgot about when you moved. These can be very damaging to your credit score and stop you from getting credit, or result in a higher interest rate.

A lot of people make matters worse by thinking: "It's a small amount and it can't have much of a negative effect on my credit scores. Besides, how do I send them a check to get rid of this, I moved two years ago and I haven't received a bill." To help you, our Smart Credit® system has a section called "Negatives affecting your Credit Score most." Our Smart Action™ Buttons are next to each item.

In many cases, the worst offenders to posting negative items on to your credit report, are medical bills. In many cases, your doctor payments or your health insurance does not cover tests & analysis sent out to various Labs. Usually the Lab will bill you separately. A lot of these Lab bills are simply discarded. They may look like junk mail and you certainly weren't introduced to them. However, make no mistake about it. This will eventually become a problem on your credit report, if left unattended by you. [Note: in most cases medical record collections are not calculated in your credit Score. However, we have found that most collection agencies report it as a different category of collection.]

If it is legitimate, pay it and pay it immediately. Don't procrastinate.

If it is not your bill, and it has been reported to your credit report, use our Smart Action™ Button. You can "Fix a Credit Report Error," "Request a Goodwill removal of a Negative" or declare "NOT My Account." Its fast and easy.

Your two other options are to disagree with the bill amount or make an offer to settle the debt.

Disagreeing with a bill amount does matter, but only if you disagree in writing. If you receive a bill you disagree with or is not yours, you must immediately inform the creditor of the following:

1. State that you disagree with the bill and what the correct amount should be.
2. You should state they are not allowed to report negatively to your credit reports since you are disputing the bill.

Remember, some debt collectors try to gain an unfair advantage by keeping a negative item on your credit report until you pay it out of frustration and can actually stay on even after it's been paid. The Fair Debt Collection Practices Act is very specific about your rights in this area.You can view this here: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

The fastest and easiest way to deal with this is to use our Smart Action™ Button to communicate directly with your creditor or collector.

If you would like to make an offer to settle the debt, use our Smart Action™ Button. Our "Settle A Debt" Smart Action™ requests the creditor to agree to update your credit reports, in a positive manner, in order to settle the debt. Its entirely up to them, but often creditors will accept a reasonable offer from you.

You can also use our Smart Action™ Button to request a payment deferral or ask for a more competitive interest rate.

Credit and credit terms have gotten more difficult these days. Be assured there is more pain then before. Beware of special offers like, "Buy today and pay nothing for 6 months." Always read the "fine print." You could find high interest rates and unreasonably strict credit terms. If it seems too good to be true, it just might be.

Bottom line, don't think the 'fine print' is just lawyerly stuff. Walk away if you need to. Know what your obligations are before you sign on the dotted line. Ask for a detailed explanation of the terms and your rights. Their fine print must also explain how the lender can report on your credit, send you to collections, foreclose, increase your interest rates, etc.

Lastly, by keeping your credit healthy, you will have more choices. So, don't hesitate to turn down credit offers until you get the right one.