Credit scoring has become a lifeline for many people. It impacts so many areas of one’s life in today’s society from the ability to get a loan, your insurance rates and now it can impact your ability to land a job. Remaining atop of the credit score can help put in place drastic measures to improve it. Reducing your credit card balance helps you stay atop your debts. Managing credit card debt can be a challenge especially if you are penalized. The interest rates can increase to greater levels creating a big burden on your finances.

If you want to improve your score, you should make sure you keep the balances down. Paying your bills on time is one way to keep card balances down. Delinquencies, even when they occur only a few days and the collections on debts can have very major impact on credit score. If you have any missed payment, you should just get current and remain current. The longer you take to pay your bill after being late, the more you are impacting your score negative.

You have to swing back and get out of the missed payment situation and be current. Paying off collection account does not remove it right from the credit report meaning that it will have a bite on your credit file image. If you work on low credit card balances, you are able to manage how to repay the amount and avoid missed payments or collections.

Such pattern of repaying in time and avoiding collections will fade away the pass credit problems and give your credit file a facelift in terms of reputation. When you have stellar credit score, it makes life easier for you because you enjoy lower interest rates, among other benefits. However, the rubber meets the road when that score turns downwards and reaches the sub prime point.

When you are accessing the score every month, if you notice a change from the previous figures, you will be quickly to find out what might have caused the change. This way, you could make corrective measures as soon as possible to bring back the score to stellar levels.

Although consumer are allowed to access their credit score from the three main credit reporting agencies at least once in a year, if you are able to take advantage of the services offered by the card issuers and other lenders, then it could positively impact on the way in which people make use of the score. Most of the credit scores including the FICO and VantageScore operate within the ranges of about 301 and 850.

If you have a score of 750 and above, then you are considered to have stellar or excellent credit. A score of between 700 and 749 is considered good credit while a score of 650 to 699 is termed as fair credit score. A poor credit score ranges from 600 to 649 while bad credit is below 599. However, these figures are not set in a stone meaning that because lenders have different definitions of what is a good score, you may find that you experience different interpretations from different lenders.

Simply because you have been rejected by one lender may not necessarily be so with the other lenders. However, the scores give a greenlight on your ability to borrow and repay credit and lenders base their decision based on other many factors besides the score. Improving credit score requires a multidimensional approach. No single aspect can help in building score and you need to look at those, which will bring in positive impacts on your credit rating.

Your payment history with you credit card is of course one of the things that will impact your score. A credit card is one thing that you use every day and contribute greatly to determining the rating you have with the credit reporting bureaus and the score pointers. A credit card utilization is an important factor in understanding how your credit card affects your credit rating.

Credit card utilization is simply how much of the credit available on your card is used on monthly basis. This is a metric that is often used in the scoring algorithm. The credit card utilization is the total credit balance reflecting in the card divided by the total credit card limit. The percent that arises from that equation is one component that is used in most credit scoring models. This is because the percentage correlates with the credit score in most cases.

Keeping balances low on your credit cards and any other revolting credit helps improve your credit score.
High outstanding debt affects your score negatively. You need to pay off debts rather than moving them around. Owing the same debt amount but having fewer open accounts could help lower your score.

This article was written by Steven Moore, who has been covering consumer finance and the credit card markets since 2006. You can learn more and connect at his Google+ page.