Having a higher credit score can save you thousands of dollars over the life of a loan. Generally speaking, the higher your credit score, the lower interest rate you’ll get when applying for a loan. The rates can vary greatly between excellent risks and poor risks.

The first thing you should do is check your credit report at each major service: Transunion, Equifax, and Experian. You can get one report per year for free, and it’s best to get each one directly from the individual agencies. Once you do, go over the full reports with a fine-tooth comb. Mistakes happen, along with intentionally fraudulent charges. If you find errors on your report, have them corrected. Negative information, other than bankruptcies, can only remain on your credit report for seven years, while a bankruptcy can remain for ten years.

If your credit history is less than stellar, there are several things you can do to improve your numbers. Remember, however, there are no “quick fixes.” All of these suggestions take time and commitment on your part:

·         Keep your credit card balances as low as possible. Paying down balances on revolving accounts like credit cards will generally have more of an impact on your credit score than paying down balances on car payments, mortgages, and other types of loans. Do not allow your balance to reach the maximum balance allowed by the issuer. Try not to let any balance reach above 30% of the credit line.

·         If you pay a credit card off, do not close the account. Most creditors like to see that you have unused credit available but are not using it.

·         If you have an older card or two, use them occasionally so that your information will be kept current. A long history of timely payments is a definite asset.

·         Maintain a mixture of credit card and installment loan balances, but try to avoid loans from finance companies. Do not have too many open accounts of any type, however. Too many is definitely not better in the eyes of potential creditors.

·         Don’t apply for or open a lot of new accounts at one time. This might send up a red flag.

·         If you’re having trouble making your minimum monthly payments, contact the creditor and be honest with them. Most banks and loan institutions are willing to work with clients to achieve satisfactory results for both parties. Request that your account be re-aged. Even if you’ve had late payments in the past on an account, many creditors will remove derogatory information if you make payments on time for a year.

The sooner you get started repairing your credit, the quicker the rewards will be realized. Some bankers state that they are more interested in a client’s past twelve months of payment history than in something that happened five years ago. If you have a legitimate reason as to why you were late on a couple of payments a few years back, like a serious injury, illness, or a lay-off, explain it to the loan officer. Many of them are actually human.