Steven Hewett

Sound too good to be true? Not as much as you'd think. And having a higher credit score will save you money - big money. Higher credit scores help make you eligible for the best terms when you borrow money, and could even save you money on things like insurance premiums too.

Try out these four simple steps to improving your own credit score...you could see dramatic results!

1. Pay your past due accounts

If an account is not in collection or charge-off status, and has a past due balance, then it is a good idea to pay the past due amount. Yes, this sounds obvious, but understand that credit scoring software severely penalizes you for having accounts with a past due balance. Making sure all of your accounts are current, and paying the amount that shows as being past due on the credit report can increase your credit score by a significant amount.

2. Try to "get rid" of your late payments

Contact all creditors that have reported late payments on your credit and request a good faith adjustment that actually removes the record of late payments reported on your account. Be persistent, if they refuse to remove the late payments at first, remind them that you have been a good customer that would deeply appreciate their help. Call several times if you need to and ask for supervisors...persistence and politeness pay off in this scenario.

3. Request to have your credit limits increased

Contrary to popular belief, having low credit limits on a credit card can actually hurt your credit score. Having low available credit limits affects your "actual debt to available credit ratio." For example, if you owe a total card debt of $10,000 and your total credit available is $20,000, you are only using 50% of your total credit available. But if you have card debt of $10,000 and your total credit available is $15,000, you change your ratio to 66% of your available credit being used. The lower the percentage of debt to available credit the better, as it shows you are able to handle having credit available without running it up to the max.

4. Do not close your old credit cards, keep them active

Did you know that 15% of your credit score is determined by the age of the credit file? Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you've had credit...as well as increase your "debt to available credit ratio" as discussed in point 3. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaac's credit scoring software, so you will not get the benefit of the positive payment history and low balance that card may have had in the past.