Maintaining and protecting a good credit score once you have it is incredibly important for long-term financial success, however understanding how to improve your credit score can be complicated and challenging. The truth is, there is no "magic number" that defines what a good credit score is. Some creditors may require you have score of 650 while others may look for a figure over 700 in order to qualify you for the specific type of credit you are seeking. No matter what the reason, having a general idea of what your FICO or credit score is ahead of time and working to improve it over time can you save you hours of headache down the road.

Generally speaking, a score of 700 will get you approved for most things-it may not get you the best possible interest rate, but you will still likely obtain a loan. An excellent credit score compared to an average one can literally save you thousands of dollars a year on home mortgages, auto loans, and credit cards.

With some thoughtful use of your money the path to improve your credit score isn't hard at all. So what are the steps you need to take to improve your credit score?

  1. Find out your FICO score. The first step to improve your credit score is to know your current score in order to give yourself a baseline to work from. Fortunately, there are a number of free resources to get your FICO score. My FICO is pretty popular, but there are a host of options that will all give you the same information.
  2. Get a copy of your Credit Report. The next step is to actually get a copy of your credit report. A little known fact is that all three credit reporting agencies are required by law to give consumers a free copy of their credit report each and every year. To get your report, you can visit which is the government mandated site sponsored by the reporting agencies.
  3. Review your Credit Report in depth. This part is important. It is not uncommon for credit reports to contain errors. Errors could range from report of a delinquent payment that was actually made on time to wrongful credit inquiries.
  4. Dispute all Errors. Once you've identified all of your errors, work to get them corrected. If you still have a balance with the creditor who committed the error, you can try and reach out to that creditor directly. Alternatively, you can contact the reporting agency. This is a pretty painless process and you can report errors with all three major reporting agencies via their respective websites. Reporting agencies are actually required by law to investigate errors and respond to you within 30 days.
  5. Pay Down Debt. This is generally understood by most of us, but it can't be understated. The level of debt you have is an important factor in determining your FICO.
  6. Pay Your Bills On Time. This is paramount to keeping a good FICO and is perhaps the most important part of determining and maintaining a high score. Even one late payment can have a negative impact on your score (however, note that many creditors will not report a late payment until it is 30 days past due).
  7. Keep revolving credit open. This may not seem immediately obvious, but keeping credit cards and lines of credit open is a good way to improve your credit score. The more available credit you have the higher your credit score, so keeping things like your credit cards open is a good thing. If the temptation to use them s too great, simply cut up your card-just don't close the account.
  8. Don't max out your credit cards. Keeping your credit accounts open is a good thing, but maxing those accounts out is not. Right or wrong, maxing out your credit cards sends a signal that you are having financial difficulties and you may be at risk of defaulting.
  9. Ask for more credit on existing accounts. If you find yourself using more than 35-40% of your available credit each month, consider asking for an increase in your credit limit. Generally, staying below these levels is good for your credit score.
  10. Don't Apply for New Credit. As noted, applying for new credit will incur additional inquiries into your history which can adversely impact your credit score. Only apply for new credit if you must.