In today's world, it's nearly impossible to get a good rate on a car loan or a mortgage without a decent credit score. Unfortunately, millions of people are left in the lurch because they have outstanding debts and other blemishes on their record. In fact, just last week, a buyer in hopes of buying a Boulder Colorado home was unable to purchase that home due to her lower than expected credit score.

If you are planning on buying a home or car anytime in the near future, there are several things you can do to improve your score and increase your chances of getting a better rate for a home loan. Follow these five tips and you can have a respectable credit score, too!

Pay Your Bills on Time
 This is one of the most important factors to one's credit score. Bills that are even a couple days late often get reported to the major credit bureaus and it creates an unneeded blemish on your credit score. Even if it means postponing a night out with your spouse, be sure to pay your bills when they are due. This step is just too easy to forget about.

Don't Be "Maxed Out" 
Lenders are nervous about loaning money to people who have already "maxed out" their available credit lines. This gives the borrower little to no breathing room for paying new bills. Stop charging now and work on getting those credit card bills and other bills reduced so you have a gap between how much you owe and how much you can still borrow.

Keep Your Old Accounts
 Most people close a credit account as soon as the balance reaches zero. At one time, this was the advice that financial advisors would give. In recent years, though, many of them have changed. They say closing your old credit account shortens your credit history and actually makes you more of a risk to lenders. Lenders also want you to have some credit available to you above and beyond the money they plan on loaning.

Consider Credit Counseling 
Financial advisors often disagree about the advantages of using a credit counseling agency to help a person better their credit score. If you're in a bad situation, though, you may have no choice. Be sure to choose a reputable one like Consumer Credit Counseling or others that have been around for years. Unfortunately, many mortgage lenders won't work with you if you are in a credit counseling repayment plan. Keep that in mind when considering this option.

Don't File for BK 
It might erase your debts or make them easier to pay, but bankruptcy pretty much ruins your credit history for life. In addition to that, it's also a psychological attachment that plays with your mind, especially while you're going through the process. Besides, new laws have made it nearly impossible to get your debts erased through bankruptcy, so what's the point?
With some patience and dedication, you can increase your credit score considerably in a matter of a few months. You may need to change a few of your spending habits and make some changes to your lifestyle, but it'll be worth it if it can save you a few points on your interest.