The credit score is something that the three main credit bureaus (Experian, Trans Union and Equifax) have been using for some time now. Until recently, however, many consumers were not aware of its existence or aware of how important the credit score can be in their lives. The workings of how a score works are somewhat of a secret, but the system provides a three digit number that represents how credit worthy a potential customer happens to be. The higher the score the better the credit, with a top score of 850 using the FICO system. These scores are used by nearly all lenders in determining whether or not to issue credit to an individual, so it’s important to have a score that’s as healthy as possible.

Here are some tips as to how you can improve your score if it isn’t as good as you would like:

• Pay down your credit. Revolving credit of all types (home equity lines of credit, credit cards) are basically “open” credit lines. The more you have outstanding on these accounts, the greater the dent in your score. Try to keep the outstanding balance as low as possible. Pay it down if you can and your score should improve.
• Have a look at your credit report. Your credit report contains information about what you owe, when you paid it, if you have any outstanding debts and whether or not you have ever filed for bankruptcy. It also, in about 25% of cases, contains some erroneous information. Fixing errors is sometimes enough to improve your score if the errors show unpaid debts that do not exist. You can check your credit report for free at AnnualCreditReport.com. All you have to do is fill out a short form and answer a few questions. The information is free, but you will not receive a copy of your credit score.
• Try not to have too much credit. Having a credit card or two is fine, but having a dozen may cause your score to drop. Lenders see too much credit as an opportunity to go deep into debt, so too many credit cards can penalize your score. If you decide to cancel some credit cards, make sure that you cancel newer cards rather than older ones. Creditors value what they call “seasoned” credit.

the best thing that you can do to help your credit score, day in and day out, is to pay your bills on time.  A single late payment can affect your credit score in a big way. It is far better to pay on time, even if you only make the minimum payment, than to pay late, even if you are paying in full. Sometimes the system doesn’t make a whole lot of sense, but it’s the system we all have to live with.

A healthy credit score will insure that you always have the best interest rates available to you and that you can usually obtain a loan when you need one. It really doesn’t take much effort to keep your score healthy; it just takes the desire to do so.