Most people worry about their credit report and want to ensure that they have the best possible score. Unfortunately, most people are not very sure how to reach this goal. The general trend is that you should live within your means, of course; but there are a few things that you could do to add to your overall points. Here are 5 such tips that could work wonders for your credit score.

1. Mortgage loans. Credit bureaus accord higher credit to people who have at least one mortgage, since statistics have shown that people with mortgages show enhanced stability and financial discipline. Therefore, when a mortgage is listed on a credit report, that report would yield a higher score than one which does not have one.

2. Take loans from banks. Avoid as much as possible, taking loans from financial institutions. Instead, go to banks or credit unions rather than finance companies. If there are no banks in your vicinity, apply online. Credit bureaus classify financial institutions as ‘last resort lenders’ and therefore having such a loan reflects poorly in regard to your credit score. On the other hand, loans from banks/ credit unions show that you are indeed credit-worthy, which reflect positively on your credit report and yield a higher score.

3. Say ‘no’ to credit cards. Credit cards serve various purposes most notably they have proven to be valuable tools on the internet. On the Internet credit cards, serve as proof of identity and age, as well as a method of payment for purchases. Therefore, you might argue that you need one or two credit cards for such reasons. Limit is key when it comes to credit cards.

Have one, two or maximum of three credit cards, if you are eligible and want them. However, ensure that you do not use more than one third of the credit it offers; and that you pay the bills in full when presented.

You could count credit cards among your worst possible enemies when it comes to credit score. Contrary to common belief, more credit cards do not increase your score each card actually decreases it. The logic behind this is that a person who has too many credit cards, is unable to manage their finances (especially credit) well.

4. Get a Car loan. Believe it or not; having a car loan actually enhances your credit score. Of course, that is only if you are paying on time and strictly make the payment deadlines. As with a mortgage, credit bureaus feel that people who avail of car loans tend to be organized and financially focused.

5. Savings. If there is something that scores 100% with credit bureaus, it is savings. You may have everything you wanted, but if you do not have savings, you are leaving yourself open to some rough weather financially. No matter how much you are earning, make it a non-negotiable point to save at least 20-25% for your “rainy days.” Savings can score high points with banks (for credit/ loan and mortgages).

As you can see from the above, you can improve your credit score easily – provided you understand the manner in which credit bureaus’ view the way you manage your finances.

There may come a time when a paycheck seems to get smaller and smaller and with this development, you may find it increasingly difficult to put aside savings for your rainy days. Although, you are aware about how important it is to save part of your income. Therefore, it is imperative that you know how best this can be achieved. Here is what you need to do.

1. Choose to save. Sound a little odd. You may say, ‘How can I save when I do not have enough money as it is?’ You will be surprised to find that most people who save for their retirement did not have ‘plenty’. Rather, they chose to save. Make up your mind to ignore part of your income just as if it never was there. The earlier you do it, the more secure your retirement will be.

2. Live without clutter. ‘What does clutter have to do with savings?’ you ask. Plenty! Hold garage sales every 6-12 months and be ruthless about the clutter that has accumulated around your home. If you have not touched it for 6-12 months, you definitely do not need it. Initially you will be happy to earn money this way. In time, however, you will realize that very often you end up buying things that you later sell at half price or less. You will soon realize that clutter is mostly things that you buy on impulse – but do not need. The more you resist this ‘impulse buying’ the more you have to save.

3. Quit trivial habits. Treating yourself, occasionally, to a great cappuccino or a lovely meal outside is a great way to spoil yourself. However, resist the temptation to make eating out a habit. A cup of coffee every day, daily lunch, chocolate, soda, cigarettes, beer, wine, partying – all these are habits and huge financial blunders. Calculate how much money you are spending on these habits each month. Multiply that amount over the course of a year and you would be horrified at the monetary cost of these habits.

4. Energy efficient home. Ensure that your home is energy efficient. In other words, that your home retains heat during the winter and stays cool during the summer. It is quite easy to ensure that heat is well regulated in your home. It may even be wise to contact a professional in this field and have your home inspected. This is a great investment and one that will save you a lot of money over the years.

5. Say no to credit cards. By all means have a few credit cards. Nowadays, your identity depends on “plastic money.” However, use credit cards with extreme caution. Charge to credit cards only when you can pay the bill in full at the end of the billing cycle, otherwise you will be required to pay a compound interest of 2-3% per month, which is financially crippling.

6. Drive less. Plan your driving. Ensure that you make every trip count. Use your trip to cover most of the tasks you have such as buying groceries, medicines, dropping off kids, etc. Plan in such a way that you manage to complete most tasks in one trip rather that going out every time you remember that something needs to be done.

7. Take a closer look at entertainment. How much are you spending on entertainment? While going to the movies is great once in a while, have you stopped to consider how much fun and cost efficient it can be to rent videos or music dvds? You do not have to “go out” in order to have fun. You can save about 75% of your entertainment budget with a little care and planning. If 75% of the entertainment budget is a lovely sum over the course of a year, imagine how much you will have saved over the course of your lifetime.