How to Improve Credit Score

Our economy is falling deeper and deeper into a recession. As it falls, obtaining debt will become increasingly more expensive. Improving your credit score allows you to obtain credit at a cheaper rate. Over the course of your loan, this could potentially save you thousands of dollars in interest. There are five distinct items that make up your credit score. Each individual has the ability to attack four separately, which allows you to improve credit score ratings.

1. Pay Your Bills on Time - 35% of your credit score is based upon how you pay your bills. Are you consistently late? Do you miss a payment every now and then? If so, you need to concentrate on paying your bills on time each month. Doing so will help you to improve credit score ratings.

2. Keep Your Credit Card Balances Low - 30% of your credit score is based uopn your outstanding balance. Try and keep your balance at less than 50% of your available credit limit. You should look at each card that you have and ensure that the balance for each one is less than 50% of that particular card's balance.

3. Keep Old Cards Open - 15% of your credit score is based upon the length that you have had your cards.If you have an old card, but do not use it, cut it up but keep the account active.

4. Do Not Fall for the Free T-Shirt Scam - Do not open unnecesarry credit cards. Each time you do, this activity is recorded. Multiple requests can actually lower your credit score; not improve credit scores . Pass on the free t-shirt or bobble head.

5. Type of Credit - 10% of your credit score is based upon the type of credit that you have used. This aspect is the most difficult to positively impact since most people use the same types of credit. Having a second mortgage, or a business loan, are examples of alternative credit that can impact your credit score.

The best thing that you can do for your family is to get out of debt and stay that way! Establish an emergency fund and stop using credit to purchase non-essential items. You will not be sorry - I promise!