Ways to avoid getting bad credit scores and tips for improving existing credit scores

With many financial bodies, banks and other lending institutions closing in on rules and regulations and making it even more difficult for people applying for any form of credit it's becoming increasingly important to make sure your finances are in good standing – especially when it comes to your credit score. There are a few simple steps to take to ensure your credit score is kept in the tip-top shape, or if you're concerned that your credit score is perhaps prohibiting you from borrowing this tips will also help.

There are a great deal of factors that contribute to your credit score, as determined by Fair Isaac (the company responsible for determining your final credit score). They are as follows:

payment history
new credit
length of credit history
amounts owed
types of credit used

The score is marked between 300 and 850, and with payment history contributing about 35% it's paramount that you make sure you pay your bills on time, as the more late payments you make on credit cards, mortgage repayments, utilities etc then the more harmful it is to your FICO score. Many people feel by cutting up credit cards when they get into a tight spot will be doing going a long way to improving their score. However, this is usually not such a good idea as you may removing traces of evidence for all those months of paying credit card bills on time. A better solution would be to keep it but lock it away – out of sight and out of mind (until its needed for reference!)

Avoid maxing out your credit cards, even if you have a sizable limit, don't make large purchases in one hit taking it to the near credit card limit. Stay below 30% of your limit for transactions and you shouldn't be harming your score. Also, avoid consolidating your debt to one large balance as this looks a lot worse than having multiple smaller balances over a few credit cards. This last one is a mistake far too many people make, and although it's tempting to do because it sounds more convenient it's possible the worse thing you can do in many instances. But, perhaps the most important principle to abide by when it comes to improving your credit score is self-discipline and getting into good habits from previous bad habits in the past.

Contributed by : Advice on credit card debt consolidation

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