Making positive changes in the way you use credit can impact your scores.

Pay your bills on time

Your payment history is the single most important part of having good credit scores. It accounts for almost one-third of the total in most credit-scoring systems, so late payments will have an immediate and very serious impact on your credit scores.

Keep your balances low

Your overall utilization rate accounts for another quarter to one-third of most credit scores. The utilization rate, also called the balance-to-limit ratio, compares your total credit card balances to your total credit limits. A high utilization rate is a strong sign of credit risk. Cards charged to the limit are a sure way to have poor credit scores.

Apply for credit cautiously

Recent credit, particularly newly opened accounts, is an indicator of increased risk until you have time to demonstrate that you can manage new debt. Don’t apply for several new credit accounts in a short period of time, especially if you are planning to make a large credit purchase in the near future. Your risk level can affect the terms of your loan and make you pay more for a car or house.

Have a mix of credit, but obtain and use a credit card

Unlike car loans and mortgages, credit cards do not have fixed payments. You have to manage how much you charge and how much you pay. So, using your credit cards wisely demonstrates that you are a good risk.

Check your Credit Report on a regular basis

You can learn more about credit scores by visiting the Credit Education section of

Published August 17, 2010
This entry was posted in Credit.

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