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It used to be that “people” made decisions about your credit worthiness. You knew your banker and your handshake was all the collateral you needed. Those days are long gone, and now a single number – your FICO score – determines your credit worthiness.

Several credit models can be used for this article, however we are going to focus on the Fair, Isaac Company model. Better known as FICO.

Your FICO score is the method used to determine the interest rate as well as how much credit a bank or lender is willing to give you. the cleaner the credit…the lower your rate and larger the sum you qualify for.

Getting and improving your credit score is not hard at all, just takes time. Here is a tip or two that will help you improve and increase your score.

FIRST: You need to get a copy of your credit history

There are many reasons you may have no credit history. Maybe you’re just starting out, maybe you pay cash for everything and have never needed a loan. In any case, if you have no credit history, your FICO score is likely to be low.

The easiest way to raise your score is acquire a loan, and pay it off on time. In general, installment loans are weighted more heavily than credit cards. In other words, you will improve your credit score faster if you buy goods with an installment loan, rather than acquiring a credit card.

Another option is to take a $1000 and open a 6 month CD at a bank. Now turn around and get an installment loan using the CD as the collateral. You then take that $1000 loan and do it again at another bank. Do this for a total of 3 times.

Now what you have is 3 loans. Pay the minimum payment for 6 months. In the last month, cash out your CDs and pay the loans off. You now have a credit history, and did not go into long term debt to get it.

SECOND: Keep your credit history clean.

Ok…now you have a good history. No major debt…now to keep the FICO as high as you can.

You don?t need to close old accounts. (Unless you?re being charged a fee to keep the account open.) Part of the FICO formula is based on the amount of credit available vs. how much you have used.

Another thing to be aware of is how you manage your money. Here?s the scenario: you have a $2000 credit card. Every month, you charge about $1800 to that card. And, every month you pay it off. But here’s what happens – your credit card company reports your credit information monthly to FICO. However if they report it on the day before you pay it off…the credit agency sees you carry a balance every month. If you can try changing the days you pay off your credit card.

THIRD: Fix your bad credit

At some point there is a very good chance you will have something that causes your credit rating to drop. Don’t panic…poor credit can be fixed. Understand however that the process takes time. In some cases you may need to talk to a credit counselor to assure you address the reasons for the drop as well as remove any future habits that may cause it to drop again.

The most heavily weighted part of your score is based on your payment history. The first thing to do to start repairing your credit history is to pay your bills on time. The mortgage is the most important, followed by installment loans, and finally credit cards.

The next largest factor on your credit is how you have used it. You can improve it by paying off your credit cards.

One final thing to look for is errors in your credit report. Get a copy of your credit report from all three primary agencies, and look at all the entries. You can find the agencies here: experian.com, equifax.com, and transunion.com. If there are any errors, start the process to have them removed. Call your creditors – sometimes they will remove negative information.

A strong, healthy, and clean credit score is a major part of your financial world. Keep it clean and don?t risk it. A good score can factor into things you can’t imagine. Don?t damage your score if you can help it.

There are so many online banks offerings in the marketplace these days that it’s difficult to pick the right one for your situation. A good place to start is to take a close look at the following.

The account opening process is what gives you the first impression. Do you really need to look through every screen to just find out how to get an account? Opening a bank shouldn’t take you more than 10 minutes, especially when done online.

The name of the bank is crucial. What I mean is that if the bank has history and is well respected, it should helps your decision.

Each online bank should be FDIC insurance which means that your money is safe (at least $100,000) of it. This year, it is actually as much as $500,000 ($250,000 per individual and double that if you have a joint account as well)

It needs to be extremely easy to access your account. Online accounts should be easy to login without sacrificing security. Some cool login process requires a token.

With online accounts, you have to deal with hackers. Make sure your bank is very secure and offers ways for you to increase that. Your password should be changed often.

Most of the time, you don’t need to contact customer support but it is very important that they are good when you do need to call them. Make sure to test them out at the beginning by giving them a call and asking questions to make sure you are comfortable with how they work.

If you have time, always find the account with the highest interest rates. You want your money to be working the hardest for you, especially in this economy.

Don’t pay termination fees if you don’t have to. Some companies will tack on an account closing fee if you want to leave them so know the fine print before you take action.

It’s critical that you understand the minimum amount of money you need to open an account. Some savings account only require $1 while other accounts require $1,000.

Easier user interface also means less chances of mistakes. While it’s sometimes hard to figure out which banks have the easiest to use interface, you can always check the bank review sites.

Do not pay account fees. Anything recurring fees need to be waived for you to even consider. Got that? Good.

With bill pay, you don’t need to mail any more checks. It’s quicker, easier, and more secure. There’s really nothing better. If your savings account has it, it’s a huge plus.

online savings accounts sometimes offer great perks that may benefit you. For example, they might approve a visa card for you when other credit card companies deny you. Some savings accounts offer unlimited ATM withdraws which you may find interesting. Research online and you might be surprised at what you find.

Creditors and bankers approve or disapprove loans based on your credit worthiness. In some cases it also will determine your credibility to certain employers or landlords.

A good credit rating allows you to be able to apply for loans and/or credit cards easily. It will also mean that you will have more chances of getting certain jobs that may require a background check. You will be able to pay your bills on time.

Having bad credit can reduce the opportunities of things. You may get approved for a loan or for a credit card but with a higher interest rate. You are considered a “at risk” customer because the creditors are not sure if you will pay your bills. If you are trying to apply for an apartment complex the landlords may take a look at your credit score to determine if you will be able to pay your rent. Not to mention that most look at the report and will use it to form an opinion about you character.

These are just some of the reasons as to why having a good credit score is important in today’s world. However, what do you do if you happen to have a bad credit score? If you have bad credit it is important to fix the problem as soon as you can.

First, you must stop your bad credit before it gets worse. So how do you do this? You pay your previous overdue debts as soon as possible. This works on establishing a new payment trail…this means the creditors will see over several months that you have made an effort.

Secondly, you can raise your credit score by opening a new savings or checking account. You should also apply for a secured credit card. This secured card will have a lower limit and a higher interest rate however,by paying the monthly credit card bills on time you will be able to see a significant rise in your credit history report.

Follow these steps you will eventually start to see a good credit rating. However, your past credit history will remain on the “books”. This does not expire for 5 to 7 years. You must remember that it does take time to raise your credit rating. You must be patient and diligent to see a change.

That is why it is very important to make positive reports for your creditors. They then will pass those on to credit reporting agencies. Remember to pay your loans and credit cards on time in order to get a good credit rating. By doing so you will eventually end up with a good credit score and history. Never miss out on a future financial opportunity when they come your way.