You might find the acronym confusing, but the APR (annual percentage rate) on your credit card is a number you should be familiar with. It’s important because it describes the cost of your credit balance on a yearly basis. A healthy understanding of what determines this rate can help improve your financial decisions. You can save by assessing your current rates against competing cards or new offers, creating responsible spending and payment plans, and avoiding actions that might trigger a higher rate. Late payments are a big hit on your FICO credit score and could boost your APR.

“It’s important for you to understand your annual percentage rate when managing your credit. You want to be sure you know just how much you are paying each month on your loan,” says Jennifer Ehresman, Bank of America Global Card Services customer experience executive. “Being knowledgeable about the factors that affect your APR will save you money in the long run.”

Here are some tips to educate yourself about your credit card:

1. Read the account agreement. If you are already using a credit card or comparing different credit card offers, pay attention to the details. Make sure you know how much you are paying in interest and how it is calculated. Some cards calculate APRs, while others do periodic rates (a monthly finance charge or a daily charge). But some cards vary these interest rates based on your use of the card, such as a 14 percent APR for purchases, but a 15 percent APR for cash advances.

2. Variable APR versus fixed APR. The account agreement tells you if your card has a variable or fixed APR. Variable means that the interest rate can fluctuate up or down from the set amount – called the margin – based on a reference rate like the U.S. Prime Rate (level charged by most banks to their most creditworthy customers). For example, when the U.S. Prime Rate increases, your variable APR can also increase. Fixed APR rates don’t fluctuate in this way, but they are not guaranteed – they can be changed based on market conditions. The good news with a fixed rate is that you will be notified first.

3. Higher or lower APRs. Which works best for you? It might always seem that having a lower APR is better, but not if you are a person who pays your balance off every month. If that’s the case, then you should be more interested in other fees that might apply to you – like cash advances or annual fees – because the APR doesn’t affect you.

4. Calculate how much interest you pay. If you maintain a balance every month, take a moment to look at how much you are paying in interest. The statement should tell you, but you can figure it out for a specific day. Your DPR (daily periodic rate) is calculated by dividing the APR by 365 (the number of days in a year). That number is multiplied by the account balance that day and by the number of days in the statement billing cycle, as shown on your statement. This figure might be a wakeup call, because what you pay in interest could be extra money in your pocket.

“Almost everyone reaches a point where they need a loan – whether for a mortgage or a start up business,” Ehresman says. “Stay in control of your credit and you will be able to secure a loan with a more favorable interest rate, thus enjoying the benefits that good credit management offers.”

Solve Debts, a leading debt settlement company located in San Francisco, California, has published the top 5 factors that affect a consumer’s FICO score. Due to the difficult economic and credit market environments, Solve Debts is seeking to educate consumers about their scores and what can be done to improve them.

“Lending standards have tightened considerably in the past 12 months,” said Andy Creager, director of Solve Debts, California.

“It’s important for consumers to know how much credit scores are determined so they can be proactive in maintain or restoring them,” he added.

Solve Debts list includes:

Payment History: One of the most important factors in a credit score is whether or not bills are paid on time. Payments 30 days past due are typically reported to all three bureaus and will negatively impact a score.

Revolving Debt Balances: Another important factor is the amount owed on revolving debt. Balances at or near credit limits will have a negative impact on one’s credit score. “If at all possible, we recommend keeping balances below 40% of the total credit limit, “said Creager, “Anything over 50% will start to negatively affect a score.”

Length of Credit History: Consumers with new or recent credit profiles will be affected. This is one factor that is out of the control of consumers and Creager noted that maintaining a satisfactory credit history over a prolonged period of time is the only solution to improving this scoring component.

Types of Credit In Use: Excessive revolving debt (credit cards or other unsecured lines of credit) will typically have a negative impact on one’s score. Creager recommends no more than two open revolving debts accounts at a time.

Inquiries: Although a minor component to the overall score, excessive “hard inquiries” on your credit profile will begin to drag down a score.

About Solve Debts, California
Located in San Francisco, California, Solve Debts is a member of The Association of Settlement Companies (TASC) and offers solutions and programs to Americans looking to get out of debt. With it’s main offices California, Solve Debts uses a mulit-facted approach to assist clients to become free from credit card companies and other unsecured debtors in a relatively short period of time. For more information, visit http://www.solvedebts.com or call 1-800-390-2805.

Just about everybody knows that you can get your FICO credit score for free once a year but some credit card holders will get lucky over the next several months and become eligible to get their FICO credit score for free once a month. A FICO credit score is a snapshot in time of your credit history so being able to check on it as often as you can is to your benefit. Every credit transaction you make and every report from one of your creditors to Fair Isaac and the other credit reporting bureaus can change your FICO credit score.

In January, 2009 Fair Isaac, the company that developed the FICO credit score and which usually charges about $16 for a credit score, completed a deal with the Pennsylvania State Credit Union (PSECU) to provide its 200,000 members with free access to their FICO credit scores once a month

Fair Isaac already offers a similar service to holders of the Sears Solution MasterCard issued by HSBC and to Washington Mutual credit card holders. A Chase spokesman said the company, which has acquired Washington Mutual, hasn’t yet made a decision if it will continue this service.

Even more consumers could be eligible in the months ahead as Fair Isaac inks more deals like these. “The top 10 banks would be on our target list for these kinds of programs,” says Fair Isaac spokeswoman Laura Heinrich.

When you get your credit card statement in the mail it may be worthwhile to check through all those extra inserts you usually throw away without looking at. If your bank makes a similar deal with Fair Isaac to let you check your FICO credit score monthly the announcement will probably be on one those inserts.

Many New Year’s resolutions may have fallen to the wayside, but one that should stay at the top of every consumer’s list is reducing debt and improving your credit report credit score.

“While losing weight is typically at the forefront of Americans’ minds as they enter a new year, managing credit health should take precedence for consumers this year,” says Lucy Duni, vice president of consumer education at TrueCredit.com by TransUnion. “Consumers who play a more active role in managing their credit will establish important lifelong habits that can enable them to have a truly holistic view of their finances.”

Here are five easy tips to help keep Americans on the right path with their credit resolutions in 2009.

Tip 1: Always pay your bills on time.

While it may sound like a no-brainer, making payments on time is essential whether consumers are trying to boost or maintain their credit score. Yet, TrueCredit’s 2007 survey revealed that one in four (25 percent) respondents had missed making one or more on-time bill payments.

Tip 2: Don’t overspend.

Keep debt below 35 percent of your limits. Although it can be tempting and easy to overspend, it’s important for consumers to keep their credit card balances low and not to max them out. Part of a lender’s evaluation includes reviewing a consumer’s available credit. If consumers are nearing or have over extended their credit, it may impact their ability to be approved for a loan at a competitive rate.

Tip 3: Keep tabs on your credit report.

In order to maintain a “healthy” credit score and to position yourself best with creditors, it’s important for consumers to monitor their report regularly to provide an up-to-date view on credit card activity and debt. It also enables consumers to identify possible signs of fraudulent activity, as the potential for identity theft remains high.

Tip 4: Monitor leases and loans closely where you are the co-signer.

When consumers open a joint account or co-sign a loan, they are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will be reflected in both credit reports.

Tip 5: Long-standing credit card accounts can help your credit score.

Consumers should be cautious when thinking about closing credit card accounts where they have been making punctual payments over a long period of time. In addition to lowering your available credit, canceling old credit accounts can also ultimately lower your credit score by making your credit history appear shorter.

To really manage your credit and your credit report credit score your best friend is the Suze Orman FICO Kit.

Americans are dealing with the credit crunch by keeping cash on hand. In the process, however, the average consumer is paying 2.6 bills late every month, according to the Western Union Payment Services Money Mindset Index.

Unfortunately, late fees and additional unnecessary charges can stack up quickly, depleting your cash flow and harming your credit report score. Here’s how it works:

The longer you maintain a track record of paying your bills on time, the better your credit report score, according to the Fair Isaac Corporation, which created the FICO score, more commonly known as a credit report score. Your bill payment history accounts for 35 percent of your credit report score, which is used to determine your eligibility for mortgages, auto loans, credit cards and other financing.

However, late fees can lower your credit report score — and there’s no quick fix. When you apply for a loan, a low score may hinder your efforts to secure funds.

“Managing your finances can feel like a juggling act that won’t end,” says David Shapiro, senior vice president of Western Union. “Flexible payment plans can help consumers keep their cash flow strong by timing the paying of bills to when they get their paychecks. This allows you to avoid late charges and risking credit standing. Over time, consumers can build a strong credit history, allowing them to finance a car or a home when they are ready.”

In tough economic times, Shapiro and other experts say, lenders will scrutinize your credit report score even more. Many credit offerings and debt consolidation loans may seem advantageous, but can actually lead to debt disaster. Here are simple tips for avoiding unnecessary fees and maintaining a good credit score:

* Check your credit report. You can get a free report at annualcreditreport.com or by calling (877) 322-8228. If you see a mistake, take necessary steps to get the mistake corrected as soon as possible.

* You can go online to sites such as money.com or kiplinger.com and receive free advice about how to contact the credit reporting bureaus when there are mistakes on your credit report. If you tend to avoid confrontational situations then you will accomplish much more by hiring a professional like Sky Blue Credit Repair.

* Research flexible payment plans that allow you to make smaller, more frequent affordable payments, such as paying a bill twice a month, but at smaller increments that suit your monthly budget.

* Pay off credit card debt. Maintaining low balances can show your ability to manage bills and can increase your credit score over time. Once you pay it off, try to only carry a balance that you can pay off in a month. Paying off your balance each month in full can help your credit score. Canceling an old credit card can hurt your credit score, however. If you’re serious about improving your credit report score then a tool like the Suze Orman FICO Kit is an indispensable helper.

* Consider same-day payments. You can maximize cash flow by paying your bill the same day it is due. For example, you can make an in-person cash payment at more than 45,000 Western Union Agent locations, and receive proof of payment within minutes. Visit WesternUnion.com to find the closest agent near you.

* Learn more about credit report scores. Download a free educational brochure from Fair Isaac Corporation’s Web site, www.myfico.com.

Just a few simple steps can make a big difference in managing your finances. Once you have a plan in place, what seems like a juggling act will turn into a smooth transition.

The credit score formula lenders use to determine your “credit worthiness” may soon change. The higher your FICO credit score, the more likely you are to get a better deal on a mortgage, auto loan and even a cell phone contract. But with the new changes, your credit score could change significantly.

Some of the factors that determine your credit score include paying your bills on time, the amount of credit you’ve established, the amount of credit used versus the amount of credit you have available, and black marks on your credit such as bankruptcy and accounts in collections.

With credit becoming increasingly difficult to secure, it’s important that you know all the facts surrounding your credit report. Credit scores are approximately determined by the following criteria:

* Payment history — 35 percent
* Types of credit used — 30 percent
* Amounts owed — 15 percent
* Length of credit history — 10 percent
* New credit — 10 percent

Sky Blue Credit Repair says the new scoring system will be more accurate than the original system, but until the system is in place it’s difficult to tell if the impact on your credit score will be negative or positive. Some of the proposed changes to the credit scoring system include:

* Stronger penalties for late payments.
* Better rewards for prompt payment.
* Different types of debt will be scored differently.

If you’re worried the updated scoring system may affect you, don’t panic. Typically, when changes are made to the credit scoring system, it takes lenders months, or even years, to make the change. Keeping an eye on your credit report is a good way to make sure you’ve got the credit score you need. If your score is lower than you’d like or you see errors on your credit report, you can take steps to raise the all-important score.

Don’t be caught by surprise when you apply for a mortgage, auto loan or credit card. See how changes to the credit scoring system might increase your score. Check your updated credit score and find out how you can improve your credit score by doing a few simple things with the Suze Orman FICO Kit. Checking your own credit will not hurt your score. Get acquainted with your credit report and be ready for any changes that come your way.