How to Improve Your Credit Score

Your credit score is one of the most important numbers in life for you to know. It not only represents the banking industry's opinion of your credit worthiness, it also will affect nearly every major purchase you make in yoru adult lifetime. Your credit score can raise or lower your insurance premiums, help you get approved for a mortgage, and make it easier to get a credit card. It also can make these parts of life much more challenging. So no matter your stage in life, whether you're managing your money with no issues or are occasionally seeking assistance from payday loans and payday advance cards, it's important to understand how to improve and sustain your credit score.

Your credit score might also be called a FICO score, which stands for Fair Isaac Company, the group that initially started issuing credit scores. Your FICO score will range from 300 to 850; the higher the score, the better your credit. As a rule of thumb, consumers should aim to get their scores above 700. This will help increase your chances of receiving preferable interest rates and loan programs. If your score is below 600, you could be considered "subprime" and will be subject to more stringent loan programs, higher interest rates and difficulty receiving credit approval. Credit reports can be improved, but it takes time. If you have defaulted or collected accounts on your credit report, it will take 7 years for them to be removed. Follow these tips to boost your credit score, or keep it in good standing.

• Pay your bills on time: Approximately 35 percent of your credit score is related to your payment history. If you pay your bills on time every month, your score will go up. Conversely, consumers who fail to make payments on time - or miss payments altogether - will have credit scores that drop. If you are experiencing trouble paying a bill on time, call your creditor immediately. Consumers who have accounts in good standing may be able to make short-term arrangements to protect their credit and keep their relationships with banks intact.
• Keep your balances under control: FICO scores don't mind if you carry balances on your revolving accounts (credit cards). But you should keep your balances in check. As a rule of thumb, never carry more than 30 percent of your available credit from month to month. If you routinely carry high balances, banks interpret that as a sign that you're unable to manage your credit. But if you keep balances low and under control, it shows that you can handle the luxury of credit responsibly.
• Don't open and close accounts randomly: You should only open new accounts when you absolutely need them. The credit bureaus don't look fondly on consumers who open new accounts and close them quickly. Instead, if you open an account, keep it for several years. The longer you keep accounts in good standing, the better your score will be.
• Use your credit: Consumers who use their credit are rewarded with higher credit scores. Don't be shy about applying for a student loan, a credit card or an auto loan. But remember that you must manage your debt effectively and pay it off on time. If you use your credit wisely, your score will benefit.