Credit means everything in today’s world. It affects a person’s ability to buy a car, a home and even insurance rates. With so much emphasis placed on good credit, it is imperative a person knows how to raise your credit score. With a good credit score, which is typically defined as a score above at least 650, moderate interest rates on credit cards and loans are offered. This can save a great deal of money in the long run. These 5 tips will help increase a score and afford a person the luxury of more credit with better rates.

1-Pay every bill on time even if the payment sent is just the minimum amount due. One late payment can dramatically reduce a credit score. It doesn’t matter if it is only a day late. Late is late and it will negatively impact the overall score. If a payment absolutely must be late, contact the creditor and ask for an extension. Most companies will offer to do this once a year.

2-Avoid having a bill sent to collections. Even if the bill is paid off, the collection report will stay on a credit report for seven years. Work with a creditor to arrange monthly payments before a bill is sent to collections. Most creditors will accept monthly payments as long as the payments are made on time every month.

3-Avoid paying off all credit card balances completely. If you want to know how to raise your credit score, it is best to have a balance on credit accounts that monthly payments are made to. This proves the ability to maintain regular payments and will help to increase a credit score.

4-It is crucial a person pays close attention to his or her credit report. Any unauthorized charges should be disputed immediately. This can also be an indicator of identity theft. As soon as a suspicious account appears on a credit report, it should be investigated immediately.

5-Avoid closing accounts that are not currently in use. Scores depend heavily on credit history. Pull out an old credit card and use it for minor purchases from time to time to keep it active. The older a credit history, the better it is for a credit score.

These tips are some of the easiest for a person to implement. The tips provided will help improve a score in a matter of months. For those who have a goal to buy a new car or a home, it is a good idea to star working on improving a credit score at least six months to a year before applying for a loan. This ensures the best rates and gives plenty of time to work on getting negative marks removed while ensuring regular payments are being made. When you are trying to find out how to improve your credit score, be wary of programs that charge a lot of money before any work is done.