Free credit score part of proposed financial reform

NEW YORK (CNNMoney.com) -- If you were denied a loan, rejected for a job or charged a higher interest rate based on your credit history, you may soon be able to get your credit score for free thanks to an amendment passed by the Senate.

Consumers have always been able to get one free credit report a year from all three credit bureaus at annualcreditreport.com. The score itself has always cost money. And while this bill won't let you get a credit score free of charge when you order it from annualcreditreport.com, it will be available without charge if it's tied directly to an adverse event. Consumer advocates hope this is the first to providing universally free credit scores to consumers.

Here are some ways you can improve your credit score now.

Don't close credit card accounts. That's because your score takes into account the difference between what credit you have available to you and what you're using. If you shut down credit card account, the total amount of your available credit is lowered and your balances look much larger in comparison. This ratio then hurts your score. Keep your debt to utilization ratio to 30% of your credit card limit. Your FICO score also looks at how long you've been managing credit. If you shut down accounts, there's a chance your credit history will appear younger than it is, and that will have a negative impact on your score.

Paying your bills on time is about one-third of your FICO score. However, you should concentrate not only on paying on time, but paying more than the minimum payments. The amount of debt you have is also vital to your credit score. "You can be in a crushing amount of credit card debt, but if you're only making minimum payments, you're losing points because your balances are slowing creeping toward your credit limit," says John Ulzheimer, of Credit.com. To really improve your credit score, you should only spend within 10% of your credit limit. So, if you're credit limit is $6,000, try not to charge over $600.

Forget those retail store credit cards. Every time you open an account with a store to get that 10% discount, you are giving the retail lender the ability to pull your credit score. And that can lower your credit score. This is especially damaging if you've only handled credit for a limited time. For example, the credit score of a 20 year old with only 1 or 2 credit cards will see their score drop more substantially than someone who is managing credit for 25 years. Applying for a lot of credit cards at the same time can also be damaging to your score. You don't have to worry if you're shopping around for the best mortgage terms or car loans, but you really want to keep those credit card applications at bay.