September Brings A New Beginning: Managing Your Credit Better

BOSTON (CBS) - Managing money ranks in the top three when it comes to making resolutions.

There are over 1 billion credit cards in the US. How many cards do you have? You probably don't need more than two cards.

Yeah, I know you get some great deals with some of your reward cards. But unless you are a really, really big spender it will take an eternity to reap any real rewards.

Pare down the number of cards you have to two. Pay the others off, stop using them and then consider canceling them. I did say consider canceling them. Your credit score uses a very complicated formula to come up with a simple number that creditors can use to judge your credit worthiness.

Part of that score is the percentage of credit you use each month to the amount of credit you have available. The key is not to be maxed out on your credit cards or late with your payments.

You want to keep the cards you have had the longest. Longevity is a plus on your credit score. Ask for an increase on your limit with these cards. Once this is done cancel a few of the cards. Check your credit score again. Then cancel the rest.

This may be a slow process if you need to keep your credit score intact.

If you have a lousy credit score, pare down to the two cards you have had the longest, cancel the rest and work on building up your score. Scores range from 300 to 850.

If your score is under 630 you are not considered a good credit risk. A score of 630 to 689 is an improvement. A good score is between 690 and 719.  An excellent credit score is over 720. The higher your credit score the lower your interest rate on a loan.

The difference between a good score and a poor one with a $300,000, 30-year, fixed-rate mortgage could be a savings of over $3,000 a year in interest.