Three Things You Should Know About Your Credit Score

Whenever you need money for anything, from applying for a loan for a new car to getting a mortgage, you credit score will make or break you. Your credit score can also affect your ability to qualify for a credit card, open an account with a cell phone carrier, or even get a job. With so much riding on your credit score, it's important to know how it works, right? Actually, learning about your credit score isn't hard. Here are the top three things you need to know about it:

• Closing accounts doesn't necessarily mean your credit score will rise.

Credit score is linked to the debt you have versus what you're allowed to spend, so if you don't have any credit cards, it could be just as bad as having a bunch of cards with high balances. If you have lots of cards, it's okay to close a few to keep your spending under control, but keep one or two cards open, work your balance down to zero, and pay off your balance every month. This will actually help your credit score.

• Being late even once can be extremely damaging to your credit score.

Everyone makes mistakes, but being late even once can have a damaging effect on your credit score. Your credit cards aren't the only accounts linked to your credit score. While they don't necessarily report good credit, if you are late on utilities bills, cell phone bills, or other related accounts, they could report these problems, which will lower your credit score. Be on time every time. Once you have these bad marks on your credit, it takes a long time of good behavior to up your score again.

• You don't have to pay for your credit report.

You should actually check your credit score about once a year to make sure there aren't any mistakes. Doing so won't have any damaging effects on your credit report as long as you aren't checking it constantly. Lots of companies will try to sell you your credit report, but don't pay for these services when you can get your report for free. Some will claim that they can help raise your score, and while that may be true if there are mistakes, typically, you can't do anything to give your score a boost except be diligent with paying your bills and reducing your debt.

This guest post is from Allison with CreditScore.net, where you can go to learn more about checking your credit score and making sure there are no mistakes on your report.

For additional information on credit cards or related topics please visit our library of credit card articles.