NEW YORK (MainStreet) — Building and maintaining an excellent credit score helps consumers save money when they need to obtain a loan.

The higher your credit score, the more lenders are willing to give you a lower interest rate, which means consumers can save additional money down the road.

Maintaining a good credit score is even more critical when you are ready to tackle larger goals such as obtaining a mortgage or refinancing your existing one.

Here are the top ten tips consumers can use to build and maintain outstanding credit scores:

1. Review your credit reports for accuracy once a year. If you see any inaccuracies on your reports, such as the wrong address or an incorrect outstanding balance on a credit card, you can correct them online.

“It’s important to start out with accurate reports – then keep them that way,” said Kevin Gallegos, vice president of the Phoenix operations for Freedom Financial Network, a company which helps consumers resolve debt issues.

Go to and obtain a free credit report once every 12 months from each of the three major bureaus.

“So often people chase their credit score, forgetting that it all starts with the credit report,” said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit. “A credit report is a reflection of a person’s financial track record. The score is a predictor of risk, a tool that lenders use in the decision process, based on the contents of the report.”

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2. Pay every single bill on time every time. The most important factor in developing good credit is to make on-time payments, since they account for about a third of the credit score. Set up automatic bill pay to make sure that at least the minimum amount due is paid by the due date.

“This ensures no late notation on the credit report that could lower the score and no late fee from the issuer,” she said.

3. Minimize percentage utilization and maximize credit available. If you have a credit card with a limit of $10,000 and you charged $3,500 on it, you have accrued 35% utilization. Anything over 35% is considered high and can impact credit scores. If you owe 50% of your limit, it will have a definite negative impact on a credit score, and a maxed-out card will very negatively impact the score, said Gallegos. The utilization rate accounts for 30% of your credit score.

4. The length of credit history accounts for 15% of your credit score. Closing an account only affects your utilization rate, because it lowers the total amount of available credit. Many people think that closing an account negatively impacts this category, Cunningham said.

“However, account activity remains on the credit report even when an account is closed,” she said. “The problem people can run into when closing an account is that it can have a negative impact on the credit utilization ratio in that you owe the same amount, but now that amount is against a lower line of credit since you closed an account.”

Think twice about canceling a credit card with a long, positive history. The longer you hold a card, the more valuable it is in your credit score determination, Gallegos said.

5. Lenders like consumers to have different types of credit, which accounts for 10% of your credit score. The credit scoring model “values how people manage different types of credit,” Cunningham said. “It likes to see closed-end accounts such as a car payment, as well as revolving accounts such as credit cards, so having a good mix of credit can help the score.”

6. Too many inquiries on your report affects 10% of your score. Attempting to open too much credit at once can send the signal that a person is desperate for credit, she said. When you are opening new lines, do so judiciously. Be wary of online offers to lower your car loan or opening credit cards at stores where you shop. All of those are reported.

7. Use a credit card, but limit it to only one. Don’t go overboard in the other direction and try to protect credit scores by not borrowing or charging anything ever. The credit agencies rely on past payment history to gauge how borrowers will do in the future.

“If you don’t borrow, they have no information to rely on,” he said. “Most adults find it helpful to have one credit card for personal business use. That’s one, not multiple cards.”

8. Stay away from retail store cards.The offers are often very tempting and stores will lure you in with a large discount for the purchases you are making that day, but these cards usually have very high interest rates. They also sometimes are issued by finance companies, which can sometimes have a negative effect on credit scores. Most people are better off using a regular credit card, Gallegos said.

9. Don’t fret if you don’t have a card. If you are just starting out in your career or getting your first full-time job, you can still build credit history with your student loan or car loan. Paying all of your other bills on time such as rent, cell phone, Internet and utility bills all count in your favor and show lenders you can pay bills on time.

10. Learn to live within your means. Avoid carrying credit card balances from month to month unless it’s an emergency or you have a plan in place to pay it off soon.

“Living within one's means includes charging and paying for only what you can pay off in full each month,” Gallegos said. “If you can’t do that, don’t buy it and don’t charge it.”

--Written by Ellen Chang for MainStreet