While your score isn't the only part of your credit report creditors look at, it can be the only deciding factor in some situations.
Many credit card companies have online applications that check your credit score, and if it isn't sufficient you are automatically declined without a chance to even explain things.
Improving your credit score is very important if you want o apply for a credit card, car loan, or mortgage with a good interest rate.
You can get loans with lower credit scores, but you're probably going to end up paying a lot of extra money in interest.
If your score is higher, it could save you a great deal of money.
Just a few points in credit score could mean the difference between getting a credit card with a $500 limit and a car with a $2,000 limit.
A few points could mean the difference between a 12% interest rate and an 18% interest rate.
So how can you improve your credit score? 1- Start paying down balances.
Your total used credit should never be greater than 50% of your available credit, and 30% is a better number.
2- Never close accounts that are in good standing.
If you have a long-term credit account that is in good standing, don't close it, even if you rarely use it.
A major part of your score is the age of your accounts, so closing an aged account could actually cause your score to drop.
Use the account occasionally for a very small purchase and pay it off quickly just to keep it open.
3- Don't open new accounts just to try to improve your score.
If you need a credit account, open it.
Otherwise, don't, because new accounts can (and often do) cause a slight drop in your score until payments start being made.
4- Avoid excessive inquiries.
Hard inquiries will drop your credit score slightly.
A few inquiries can end up tanking your score quite a lot.
This is another reason not to apply for new accounts just to try to raise your score.