For the rest of your life, you will be graded on how you handle credit. Its a fact of life, whether we like it or not.

Your credit grade is called a FICO score. Credit bureaus risk scores produced from models developed by Fair Isaac Corporation are commonly known as FICO scores. Without a good FICO score, lenders tend to be wary of extending credit. Its easy to establish a credit history, but challenging to repair your record if youve mishandled or had problems with your credit in the past.

Information about past borrowing and repaying, as well as late payments and bankruptcy, is recorded in your credit history or credit report. Your information is forwarded to a credit bureau when you fill out an application for credit from a bank, store or credit card company, together with regular updates on the status of your credit accounts, address or any other changes you may have made since the last time you applied for any credit.

You can improve your credit scores by taking a close look at your credit reports and charting a plan of action to improve them. Your plan of action should include these strategies:

Strategy 1: Improve Your Payment History

Always pay your bills on time. If you have past-due bills now, get current and stay that way. Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off your credit reports.

Strategy 2: Keep Balances Low on Credit Cards, Cell Phone Bills and Other Accounts

Lenders want to see that you are not living beyond your means. TheMoneyExpert.com recommends that non-mortgage credit payments each month should not exceed more than 15 percent of your after-tax income. http://www.TheMoneyExpert.com

Strategy 3: Manage New Credit Wisely

Dont open several new accounts in a short amount of time. Opening too many accounts is an especially poor strategy if you dont have a long credit history. A credit inquiry is initiated each time you apply for credit, and this in turn can lower your credit score by as much as 5 points. Apply for only the credit accounts you need.

Credit scores usually range from 330 to 830. The higher your score the better. High scores show that youre a low credit risk; scores in the middle alert creditors that they might need added information to evaluate your situation; low scores point to you being a high risk. Its important to know your score before walking into a creditors office. IdentityGuard.com offers a credit-monitoring product that allows you get your report, updated daily.

The best strategy for keeping your credit score high is to learn the secrets of making more money and in managing it well. Visit http://www.TheMoneyExpert.com and be sure to pick up a complimentary subscription to Insiders AdvantageThe Worlds Leading Free Money Tips Newsletter.

-Jim Guarino, CEO of http://www.TheMoneyExpert.com 

2006 American Financial Education Network / http://www.TheMoneyExpert.com