Manage debts well for good credit scores

NEW YORK — Simply having debt won't necessarily hurt your credit score.

So reports Experian Consumer Direct, one of three credit agencies that monitor your financial behavior.

Your credit score is an analysis of your past credit history that is used by lenders to figure out how much of a risk you are.

Scores range from 300 to 850.

The higher your score, the better — only those with a score of 700 or higher are eligible for a lender's best interest rates.

In a recent study of personal debt and credit scores across the nation, Experian found that consumers with debts above the national average also tend to have better credit scores — they know how to manage their debt well. U.S. consumers have an average debt of $11,224.

Yet consumers with debt exceeding that amount have an average credit score of 695, compared with the national average score of 677.

The key in keeping your credit score high is to practice smart financial behavior.

To avoid lowering your credit score:

• Don't miss payments or make payments late. Keep your debts at 50 percent or less than your balance limit. Hovering near your credit limit or going over can lose you points.

• If you open new lines of credit — either for a credit card, loan or other financing — be careful to space out your requests.

Asking for too much credit within a short period of time is viewed by credit-reporting agencies as a sign that you might be getting in over your head.

• Don't extend yourself beyond your means.

So-called universal default penalties allow a credit-card company to increase your interest rate if a late payment shows on your credit report for any credit-card account or loan or other debt involving any other company. It doesn't matter if you've never made a late payment to the company that wants to increase your interest rates.