If you have ever wondered if your credit score makes a difference, in day to day credit situations, the answer is a resounding... yes. In fact, the lower your credit score the harder it will be for you to obtain any type of credit. However, it is not impossible as long as you are willing to pay the price.

The price you pay is the percentage of interest your loan or credit card will carry. Since financial institutions are in the business of making money, most don't think twice about issuing credit cards to individuals who have been deemed a 'high credit risk'. To say this practice is big business is putting it lightly.

Currently, the average credit score is 720. As a rule, if your score falls under 600 you will probably pay more in interest than someone with a higher rating.

Several factors are used to determine your credit score. They include: payment history, total debt owed, length of credit history, types of credit used and new credit.

The best thing you can do to improve your credit score is to pay your bills on time. As noted above, this is the most important criteria when it comes to determining your rating.

It is also important to keep your balances as low as possible. This will go a long way in improving your credit score. Why? When your credit cards are almost 'maxed out' you are considered a higher risk, because this shows you probably have a need to reach for a credit card, instead of paying with cash.

Just because you currently have bad credit doesn't mean that it cannot be improved upon. There are steps you can take to 'fix' the situation.

Unfortunately, this process won't happen overnight. Depending on the extent of your ailing credit it will take months, sometimes even years, until you are fortunate enough to have good credit. Look at it this way, it probably took quite a while for your credit to deteriorate... you can't expect the bad stuff to disappear in just a matter of weeks.

Step number one. Obtain copies of the credit reports. You will need one from each of the three major credit bureaus... Equifax, Experian and Trans Union. There are two ways to get your credit reports, at no cost. Every individual in the US is entitled to one free credit report per year, per credit bureau.

If you have already taken advantage of this offer, apply for a credit card. Obviously you won't be approved because of your credit rating, but the denial will entitle you to a free report.

Step number two. Determine a budget. This will give you some idea as to how much extra income you have that can be put toward your outstanding bills. It is always best to pay off higher interest credit cards first... even if the same amount of money will pay off two lower interest cards. You will end up saving money, in the long run.

Step number three. Change your shopping habits. Chances are impulse buying is what got you into debt in the first place. If you can curb the problem, it will make it easier to achieve creditworthiness in the future.

Follow these tips and you can repair your credit rating yourself.