How to Improve Your Credit Score

Average credit scores for Americans are estimated to be about 690. If you don't know your credit score and are planning on purchasing something that requires a loan, it's probably a good time to find out how you rank in terms of credit. While it is commonly (and mistakenly) believed that having debt is "bad", the truth of the matter is that debt itself isn't bad, it is the way that you manage your debt that can get you either a good or bad credit score.

Whether you are below or above average credit scores in the states, there are a number of things that you can do to improve your score and a number of things that you should avoid if at all possible.

In order to raise your score, first make a commitment to paying your bills on time. If you are having trouble paying all of your bills, the one that you need to pay no matter what (even at the expense of others) is your mortgage. Missing a mortgage payment is a much bigger blow to your credit than a missed or late credit card or utility bill payment.

Next, consider opening up new lines of credit for a rainy day. Do not go credit crazy and open up a bunch of accounts at once. But every 6 months or year you can apply for a new credit card and not use it. This raises your unused credit amount and also your score. If you are maxed out on all of your credit lines, this brings down your score.

Once factor that goes into your score is how many different types of credit you have. If you are balancing a mortgage, car loan, and several credit cards, this shows that you can manage various forms of credit and that fact weighs in positively on your credit score.

Keep in mind that longevity is also important. The longer you can go on paying your bills on time, opening up new credit lines (while not using them) and balancing a variety of credit accounts, the better your score will be.

Just to recap on what you need to avoid in terms of maintaining good credit status or improving below-average status:

* Do not delay or skip a mortgage payment.

* Do not close down credit accounts, even if you are not using them.

Leave them open to show that you are not using all credit which is available to you.

* Do not make requests for new credit lines all at one time.

If you are in the average American credit range, you shouldn't have any trouble getting any type of loan. However, you will not be paying the best interest rate on your loan. A person with a credit score of 520 will pay almost four percent more on interest than someone in the highest ranking credit bracket. That is a significant difference. And if you are in the lower bracket, think of how much you will save by bringing your score up. Being among the above average credit scores is definitely attainable.