Tips For Improving Your Credit Score

Managing debt and developing healthy saving habits can be a challenge, particularly during a tough economy. But there are ways for consumers to improve their FICO score, which is the number used by credit agencies that determines your credit worthiness. The higher your FICO score, the more likely you are to receive approval for loans with more favorable interest rates. Most experts say consumers need at least a score of 700 to be considered an "excellent" or "very good" credit risk. People considering a bad credit consolidation loan often use these tips to achieve a great FICO score. Effects could take some time to be reflected in your score.

• Make your payments on time:

Healthy payment histories boost your score. If you have a history of missing payments, get current. The longer you pay bills on time, the better your score will be.

• Keep balances low on credit cards:

If you have a high percentage of debt on your cards - say an $8,000 balance on a $10,000 limit - your score will decrease. Try to keep your balances to no more than 20 percent of the available limit.

• Pay off your debt:

Reducing your debt raises your credit score. Moving your debt around from account to account, but maintaining a high total balance, raises your score.

• Don't have more accounts than you need:

Opening and closing accounts shows a lack of discipline and will reflect poorly on your credit score. Open only the accounts you need, and keep them open.

• Know you can re-establish good credit:

If you've gotten into trouble in the past, don't be afraid to get back in good standing. Defaulted accounts that were forwarded to collection services are deleted from your credit record after seven years. While you repair your record, be sure to only open necessary accounts, pay your bills on time and try to keep your balances low.

• Check your credit:

You're allowed to check your credit score and report. In fact, it's encouraged! Monitor your credit to make sure there are no errors - closed accounts listed as open, perhaps accounts that are not yours - and notify the agencies if you find any. Consumers who monitor their credit generally have better money management skills.

After you read these tips and you decide its time for debt consolidation you can go over how to consolidate debt.