Your credit score accounts for the amount of interest you have

to pay for a loan or a credit card. Increasing your score in

just a few points will make a big difference in the interest

rate you will pay for a purchase. If your credit score is high

enough, you’ll have no problem qualifying for a lender’s best

rates and terms on auto financing, home loans and small

business loans. The following are a few tips about how you can

protect and improve your credit rating.

1 - Order Your Credit Report.

Your credit score is based on your credit report, so you should

begin by ordering your reports and reviewing each one for

accuracy. You can get your reports from a service such as

MyFico.com, or order from Equifax, Experian and Trans Union

separately online or by phone.

2 - Check Your Credit Report Information for Inaccuracies.

Check the identifying information for name, social security

number, birth date and incorrect address. Make certain that old

negatives and paid-off debts are deleted. Check for accounts and

delinquencies that are not yours, late payments, charge offs,

lawsuits, judgments or paid tax liens older than seven years

old. Also, paid liens or judgments that are listed as unpaid,

duplicate collections, bankruptcies that are older than ten

years and any negative information that is not yours.

3 - Always Pay Your Bills on Time.

Payment history makes up more than a third of the typical

credit score. If you paid bills late in the past, you can

improve your credit score by starting to pay your bills on

time. Lenders are looking for any sign that you might default,

and a late payment is a good indicator that you are in

financial difficulty.

4 - Keep Credit Cards Balances Low.

Carrying smaller balances is the best way to increase your

credit score. The score measures how much of your limit you use

on each credit card or other line of credit, and how much of

your combined credit limits you are using on all your cards.

Within 60 days, paying down credit card balances can increase

your credit score by as much as 20 points.

5 - Try Not to Open In-Store Credit Cards.

Although your first credit accounts can serve to build and

improve your credit history, there comes a point when each

subsequent credit application can reduce your score. New credit

cards reduce the age of your credit history, and a department

store credit card isn’t good evidence of credit worthiness.

Every time you apply for a retailer’s credit card your credit

store gets dinged.

6 - Be Conservative When Applying For Credit.

Having at least one credit card that’s more than 2 years old

can help your score by 15 percent. Make sure that your credit

report is checked only when necessary. Or, if you are shopping

for a home, try to apply for loans within a two-week period. By

keeping the loan process within a two-week period, all of the

credit report lookups are seen as one single request.

7 - Don’t Close Credit Cards or Other Revolving Accounts.

Shutting down unused accounts that have outstanding balances

without paying off the debt changes your “utilization ratio,”

which is the amount of your total debt divided by your total

available credit. It will reduce the gap between the credit you

are using and the total credit available to you, and that can

hurt your credit score.