What does my 665 credit score mean? What factors determine how high or low my credit score turns out to be? These are questions I have been asked over and over. Most people don't truly understand how their financial decisions affect their credit scores. For most potential borrowers their credit scores will determine whether or not they can obtain a home loan. If your credit scores are high it doesn't matter how much money you make or if you have a job or not, chances are you will be able to get a home loan. Not only does good credit help you get a home loan, it also helps you get a lower interest rate. The topics discussed in this article will provide three easy steps for insuring that your credit does not hinder your financial decisions in the future.

First, what is a good credit score number to have? Well, the higher the better, but there are definitely certain numbers you want to stay above. After looking at thousands of credit reports I would say 660 is around the average credit score. Anything above 660 is heading in the right direction. Once your score is above 720 you are doing great. Above and beyond that is fabulous, but doesn't make a big difference for most potential borrowers. I would strongly encourage everyone to make sure their scores stay above the 600 mark. Below 600 things start getting a lot more difficult. The further below 660 you get, the more problems you are going to run into. Don't be discouraged if your score is already below the average. It is very common for people to follow the rules listed below and see their scores rise quickly.

Rule #1

Make sure you pay everything on time!

Simply having one late payment on your credit report can be the difference between a 700 score and 620 score. Keep track of all the bills you receive each month and make sure they are paid before the late date. Some of my clients create bill calendars and check off each bill, each month when they make their monthly payment. If you are going on vacation make sure you have your bills covered. A good way to avoid late payments is to have automatic withdrawal on all your accounts. This way you don't even have to rely on the mail system to pay your bills on time.

Rule #2

Keep your credit card balance to limit ratios low!

This is really important. People are simply unaware that when they go to Circuit City and get a Circuit City credit card (usually to have no interest for six months) to make a purchase they are damaging their credit. Why? Well what happens is they give you a $500 limit for your $450 purchase, creating a very high balance to limit ratio. It is better for you to have a $5,000 balance on a credit card with a $13,000 limit than the Circuit City card ratio created above. Generally the rule is to keep all your credit card balances below 50% of the card limits. I encourage all my clients to maintain balances on their credit cards that can be paid in full each month. Easier said than done.

Rule #3

Mistakes happen, check your credit report!

In the mess created by billions of pieces of paper and mail, mistakes happen. Bills don't get sent, payments don't get received and it isn't your fault. Probably fifty percent of the time I show my clients their credit report, there is information on it that they were not aware of. By the time it is noticed it can be too late. Have your trusted loan officer check your credit report once a year and make sure nothing unusual or incorrect has been reported. There is nothing more frustrating than getting a late mark on your credit report for a bill you didn't even receive. Don't wait. Be proactive and protect your credit scores.

Follow these three rules and your credit should be great. When it comes to getting your home loan you are going to want every loan option available to you. Your credit score will be the key to getting the home of your dreams. Act now and insure your credit for the future. It is never too late to improve your credit scores.