Your credit score is a measurement created by the credit bureaus, used by lenders and others, to make decisions as to whether or not to extend credit to you. Not only that, many lenders use your credit score to determinewhat rate you’ll pay. The higher your credit score, the less you’ll pay in interest. The lower your credit score, well, you can take a guess what that means.

These days, credit scores are used for things other than lending, as well. Your ability to get auto or homeowner’s insurance, or the rates you pay, may depend on your credit score. So may your ability to get a job, as many employers pull credit scores on job applicants.

What can you do to maximize your credit score? Here are a few tips:

• pay on time. Late payments and delinquencies are the biggest single component of your credit score.
• correct mistakes. Get your free credit report from each of the major bureaus at www.annualcreditreport.com. If you find mistakes, correct them.
• reduce your credit card balances. One of the components of your credit score is the percent of capacity you’ve used. If you max out even one credit card, your score goes way down.
• don’t necessarily close credit card accounts. This one is surprising, but if you close credit card accounts, you’re actually decreasing your borrowing capacity relative to what you have outstanding in balances!

If you missed our credit score seminar last fall, click here for additional information on credit scores and credit reports.