Maintaining Healthy Credit Keeps Interest Rates Lower and Helps Save Money

The larger your bank balance, the better. And when it comes to your credit score, you need to think big, too.

According to the Financial Planning Association (FPA) based in Denver, CO, your healthy credit score is not just a factor in determining whether you get a loan or a line of credit, it often determines how much you will pay for credit.

Remember, the better your credit score, the lower your interest rate--so having a healthy score can save you money.

The FPA says credit scores are calculated from data in five categories.

Payment history on bills, loans, etc. and amounts owed - or credit balances - account for about two-thirds of the score. Then, length of credit history, new credit and types of credit used comprise the rest.

Credit scores range from 300 to 850. A score of 750 or higher is considered "excellent;" 720 to 749, "very good;" 660 to 719, "good;" 620 to 659, "fair;" and 619 or lower, "poor."

Here are some tips from the FPA towards maintaining a healthy score:

1. Pay bills on time. Nothing impacts a credit score more than your bill-paying history and habits. And no bill is too small to overlook.

2. Automate. If you struggle to pay bills on time, set up your online banking to make automatic bill payments or provide payment reminders.

3. Instead of skipping a payment altogether, make a late or short payment.

4. After a late or missed payment, get--and stay--current. Positive payment patterns going forward can overshadow a past payment problem.

5. Keep credit card balances low and avoid maxing out cards. Carrying a high level of debt likely will hurt your credit score. Maxing out your available credit surely will.

6. Pay down your debt over time.

7. Think twice before closing the accounts of credit cards you do not use. Closing credit accounts may actually lower your credit score. If you plan to close an account, start with one you opened recently, and for the sake of credit history, leave your oldest credit card account open.

8. Do not open multiple new credit accounts at once. It can lower your credit score.

9. Protect your personal information, like social security, credit card and bank account numbers. Identity theft is a real and growing threat to much more than your credit score.

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