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Your credit score, whether you want it to be or not, is one of the most important factors that directly affect how much you can borrow, for how long you can take to pay it off and under what conditions and interests rates you are held under. Everyone must understand that the only one who can do anything for their own credit is themselves. There are several things that each person can do to have an effective and positive effect on their credit scores. Some of these things is paying things on time, lowering and maintaining as low of debt as possible, knowing and maintaining the 'right' type of debt.

The most important and powerful thing a person can do is pay bills consistently on time for large amounts of time. Your credit report not only tracks what you owe and to who, it also gives a record of 'how' you pay your bills. This record is called payment history. I spent several years analyzing credit reports and the scores and the biggest factor was always payment history. Payment history accounts for nearly 80% of your score. Now if you are like me, and the statistics say you more than likely are, you are horrible at paying bills. For most purchases, you need a solid two to three years of paying all of your bills on time to make an extreme difference. For those of you that have credit nearing the 800 mark, but can't quite get above it, you need things that are older than seven years that you have paid on time 'and are still open and active'. Having very old things that you have paid on time forever will guarantee flawless credit.

How much you owe does have an effect on your credit score. How much you owe usually is not as big as one might imagine. Everyone owes money in one fashion or another. The circumstances of how you owe the money does. Two people can have identical payment history and owe the exact same cash of 50,000 dollars. One of the two has a credit score of 750 and the other has a score of 650. The difference lies in secured and unsecured debt. Maintaining secured debts, that you pay on time, is another way to increase your credit score while minimizing unsecured debt.

Unsecured debt is debt you owe which has nothing to back it up except your name and your paychecks. Credit cards are an example of unsecured debt. When money is borrowed on a credit card, if the borrower walked outside and got hit by a train the next day, that money would be unrecoverable. Well, unrecoverable from at least the borrower. The same way applies in bankruptcies. Credit cards

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