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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.

Although there are several credit models, the most commonly used is FICO, based on a model created by Fair, Isaac Company. Their consumer website is myfico.com, and you can find information about the FICO credit scores there.

Your FICO credit score can be used to determine your interest rate and how much credit a lender will give you. So taking care of your score, and keeping your credit clean will save you money.

Preserving your FICO score, and improving it, is not difficult, but it may take time. Here are some tips to maintain and improve your score, based on three credit situations.

Strategy One: Obtain a 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 way to acquire a better credit history is to take $1000 and open a 6 month CD account at a financial institution. Now, get an installment loan for $1000, using that CD as collateral. Now, here’s the trick. Take the $1000 loan, and open another 6 month CD account at another institution. Take another loan for the $1000 at the second institution. Do this one more time.

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.

Strategy Two: Maintain Your Good Credit History

Good job - you have paid your bills on time, and do not have high credit card debt. Here’s some ideas to keep your FICO score as high as possible.

First, don’t close your old accounts. One part of your credit score is based on the amount of credit available verses amount of credit used. Closing old accounts can lower this part of your score.

Second, paying off your credit cards every month is good money management, but you may be able to improve in this area. 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. If they report it before you pay off your card, it looks like you carry a balance on your credit card every month. You may find your FICO score improves if you pay off your credit card at a different time of the month.

Strategy Three: Repair Your Poor Credit History

For whatever reason, if you have a poor credit history, there are things you can do to improve your score. Some of them take time, and you will probably be best served by talking to a credit counselor to be sure that you not only repair your credit history, but also eliminate what caused that poor credit history in the first place.

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 portion of your FICO score is based on how you use credit. The fastest way to improve this is to pay down 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.

Your FICO score is an important part of your financial life, and using these strategies may help improve your FICO score. Before making any drastic changes to your finances, consult with a financial advisor.

It is the modern American horror story, but one now being seen increasingly throughout the world…

A successful middle class consumer, with a good income and excellent credit history, enters middle age knowing that it is time to start saving for retirement. Then something unexpected happens. It may be good news, such as the birth of a new baby, or it may be bad - an illness, a family emergency, a divorce…

None of these events by themselves, are usually enough to destroy anyone’s financial future. But, they can trigger credit card abuse and eventually lead to significant financial hardship. What may have been a problem for only a few people who couldn’t “handle” credit in the past has become an increasing problem for many people.

It has become quite common for the middle-aged, middle class consumer to have many bank and store charge cards at any given time. And most, if not all, are carrying large balances. In 2005, the average consumer had nearly $10,000 in credit card debt, or even double or triple that if loans for cars and other large expense items are included. Worse still, in 2005, the credit “rules” were changed…

First, many credit companies have now doubled the minimum monthly payment to four percent. In itself, this is not a real problem for most consumers. Most cardholders probably pay this anyway.

Second, with no usury laws to stop them - and despite inflation rates from 1-to-3 percent - credit companies have pushed interest rates for “problem” cardholders to 30 percent or more.

Third, if there is a problem with any creditor, such as a late payment, other creditors have the option to cut their card’s credit limit (often to the current balance), double or triple the interest rate and cancel any “special offers”.

The “Six months no interest” or “Zero interest on all balance transfers for one year” are attractive offers. But the slightest infraction involving even one creditor and the next bill may include full interest charges - from the start of the offer.

It only takes one creditor to turn someone with a decade of good credit into a “problem” customer. A bill one day past due may cause an account to go up in interest, down in limit or both. And this can spur other credit card companies to follow suit meaning that in a short time all your credit cards could be charging a high rate of interest, over-limit fees and even late charges when your bank account is hit by the high rate of interest.

Now a double minimum payment becomes a serious problem, as that original $10,000 total debt begins growing by $250 a month in interest, plus up to $500 in accumulated over limit fees and another $500 in possible late fees!! You can begin to see the problem…

And what about bankruptcy to solve the problem? Not any more. As of 15 October 2005, it became virtually impossible for an American consumer to declare personal bankruptcy. At least, not without a lot more cost, a lot more time - and the certainty of losing everything, including home and car.

The moral of this story is this. Take another look at those colorful bits of plastic in your wallet, the ones offering those great promises of “easy payments” and a better lifestyle. See them now for what they really are…Viral monsters, ready, willing and able to destroy the cardholder’s life in the blink of an eye.

Next time, think about handing the sales clerk some colorful cash instead.

Many people dream of retiring with a healthy bank account but few people actually achieve it. This is largely due to lack of discipline in building up their retirement fund and poor spending habits. While building a retirement fund requires time, you can accelerate the process by making incremental but positive changes in your spending habits.

Here are seven ways that you can change your daily lifestyle for more positive results in your spending habits:

1. Do more walking than driving. If you can reach your destination within ten minutes by car, consider leaving the car behind and walk instead. You will save money on gasoline and parking fees. This can easily add up to a few thousand dollars a year.

2. Use a bicycle if the destination is within 30 minutes by car. This helps promote blood circulation in your body and also reduces environmental pollution. You can also save on gasoline and parking fees.

3. Bring your own coffee to office. Many people like to drop by a Starbucks or similar coffee outlet and end up spending a few dollars or more on a cup of coffee. You can potentially save many dollars dollars each week just by making your own coffee at home and bringing it to your work place in a Thermos. Besides, who knows, it may taste better than the coffee from Starbucks! If you really cannot live without Starbucks coffee, consider getting a Starbucks rebate card. You can use the rebates to redeem free Starbucks coffee after you have accumulated enough points.

4. Dine at home more frequently. You can experiment with different recipes and save some money at the same time. In addition, you are honing your cooking skills and this could be very useful for the home dining experience.

5. If you are a smoker, start reducing the number of cigarettes you smoke each day. Over time, you may be able to quit smoking completely. Besides saving money by not buying any more cigarettes, your health will also improve and this means a huge saving in your medical bills.

6. Have you ever noticed how much time you spend sitting in front of the television? The longer you sit, the worse it is for your blood circulation. Besides, the time you free up can be used for more useful tasks such as teaching your kids or learning a new skill.

7. If you are an avid reader, use the public library whenever possible. There is no need to buy the latest books from bookstores like Borders unless it is in a category that does not fit into a public library. The public library will usually acquire popular titles after some times. Learn to be patient.

These seven ways are a good start for changing unhealthy spending habits. However, you should continue to research and incorporate more healthy habits that contribute to the building of your retirement fund. By re-investing the money saved from using these tips, you will be many steps ahead of your peers and closer to your retirement goals.