Tips for improving your credit score and keeping credit cards open

CardData.com recently announced that the average US household has over $10,000 in credit card debt alone, and that debt ceiling is rising every year. With concerns about a lagging economy, oil prices, and political turmoil abroad, worrying about your credit score is probably not another worry you need compounded to your list of concerns. Here are a few ways you can improve your credit score and keep those credit cards open.

1) Pay your bills on time. This one may seem obvious, but it's on that a lot of people miss out on. Paying your bills on time means that you must make at least the minimum monthly payment every month, without missing a single time. Each time you miss a payment, the folks at the credit card companies get nervous, and, like startled wildebeest, it doesn't take much for them all to start stampeding towards high credit fees of 20% or more. The best way to avoid this unsightly event is to only have as many cards as you can pay off reliable. That will also help show that you don't take on more credit than you can handle.

2) Don't use more than 50% of your credit limit. If you need to use more than that, consider calling your credit company and asking them for a "credit line increase." This will help keep you out of the FICO gallows and will also improve your score because a higher limit means that the normal balances you ran up before will now take up less of your credit limit, which is a good thing (but obviously only if your spending does not increase with your credit line - be wary of this). This is what credit card companies call your credit ratio, and it can account for as much as 30% when they determine your FICO score.

3) Get - and keep - your cards for as long as you can. This shows the credit companies that you have the financial stability to stick with it and it gives them more of a history to draw on when considering you for important loans like financing a new car or taking out a home loan. Avoid cards with annual fees or high APR's, and make sure you keep them open, either by using them occasionally (if they are for emergencies only, which they should be) or by calling your credit card company to make sure they know you still wish to keep your card open.

4) Be aware of your score. If you've gotten this far, you could probably already tell me what your FICO score is, which is a good thing. If you can't, you should head over to www.annualcreditreport.com, which will provide you with a free report of your credit standing (up to once every year under a new federal law). Another important thing to do when you get your credit report is to scan it for inaccuracies. They do happen, and can bring your score down by as many as a hundred points or more if you are not careful. If you see a discrepancy, call your credit card company to work something out. They will be forced to start an investigation into your claim.

5) Don't accept too many credit cards - or ask for too many credit line increases - in a short amount of time. When someone starts grabbing for credit like a chicken trying to keep it's eggs from being taken away, it makes the credit companies nervous. All sorts of scenarios start running through their heads (is he about to fake his death and buy an island somewhere?), and while they may be way off the mark, it'll end up hurting you financially. A six month cushion between any net credit increase is usually a good rule of thumb.

The main thing is to remain reliable and avoid giving credit card companies any reason to worry. Your FICO score will haunt you for the rest of your life, and while you can improve bad credit, it is much easier to start - and stick - with good credit.