Nurture your credit score with responsible spending and payment habits. Follow these tips to work toward improvement of your score over time.

Has your credit score taken a few dings in recent months? Unfortunately, you can’t magically fix your credit in one easy step, but you can gradually improve your credit score with careful money management.

Follow these tips to stoke your credit and, in time, hopefully see real improvement.

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Check your credit score
Your credit score is constantly in flux. It changes whenever your creditors report new information (when they report on your balance, credit limit or the opening of a new credit account, for instance). Depending on how many credit cards and loans you have open in your name, this means there’s potentially a lot of information being recorded.

The information gets recorded in your credit report with the three major bureaus, Equifax, TransUnion and Experian. Together, these agencies issue over 3 billion consumer credit reports a year and maintain files on over 200 million Americans. That’s a lot of data, and a lot of potential to record information incorrectly.

One of the best things you can do to maintain or raise your credit score is to check your credit report at least once annually, looking for errors. Make sure the balances, limits and types of accounts listed are accurate. If they’re not, you’ll need to write to the bureaus and get the information corrected. Keep in mind that even a small error can affect credit scores negatively.

Thanks to the Fair Credit Reporting Act, everyone is entitled to one free copy of their credit report each year. (You can get it by visiting annualcreditreport.com.) Keep in mind that there are other credit monitoring services that bill monthly for anytime-access to credit reports. Unless you’re actively shopping for a home loan, you likely don’t need up-to-the-minute access to your reports, however. Checking once or twice a year is enough, generally-speaking.

Pay your bills on time
Besides correcting errors in your credit report, another great way to maintain your scores is to pay your bills within the grace period. Lenders report late payments once you’re thirty days past due, and just one late payment can ding your credit score by 100 points. It’s important to set up payment alerts and automatic debits to help eliminate missed payments.

Pay off credit cards first
Not all debt is created equal in the eyes of the credit bureaus. Revolving accounts, or credit card accounts, affect your credit score more than installment accounts like auto loans or mortgages. If you’re in debt and want to raise your scores, consider paying down your credit card balances first. Knocking down this high interest debt by even a few thousand dollars over the course of a year can raise your score by 100 points, whereas wiping out the same amount on a mortgage might only raise your score by 10 points.

Don’t use too much credit
Another way to raise your credit score is to use less than the maximum amount of the credit you have available to you. In fact, experts suggest using just 10 percent of the credit you have available. For example, if you have a card with a $10,000 limit, that would mean charging no more than $2,000 at a time.

It can also be to your benefit to maintain a “favorite” credit card, one that you use for the bulk of your spending. Making all of your charges to just one card and then either paying it off every month or keeping the balance as low as possible can work in your favor. You do not necessarily want to completely close credit accounts, however, as this reflects negatively on the total amount of credit available to you.

Spend smart
By following these tips, you should see an improvement in your credit score over time. Remember that the key to seeing your credit score rise is to nurture your credit with responsible spending and payment habits.

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Start planning now to make your contribution to a Roth IRA. (It’s never too early to start!)

Worried you won’t have enough retirement savings? Consider opening a Roth IRA, a type of retirement account that offers flexibility and financial advantages to middle-class Americans.

What is a Roth IRA?
IRA stands for “individual retirement account.” These savings instruments were born in the 1970s when the United States government realized that middle-class Americans needed additional vehicles beyond employer-sponsored pension plans and Social Security in order to plan long-term saving for major life expenses. Though there are several different types of IRAs designed for different purposes, including funding a child’s education or a developing a small business, the Roth IRA was developed specifically to help Americans save for a comfortable retirement. It is a lot like a savings account that you plan to invest in long-term for greater profit.

Roth IRA specifics
Roth IRAs are popular savings vehicles because they offer flexibility. Whereas contributions to a traditional IRA are taxed upon withdrawal, the money invested in a Roth IRA has already been taxed, so any return you earn won’t be taxed again as long as you wait until age 59 and a half to withdraw it. (Note that, after five years invested, you can choose to withdraw original Roth IRA contributions earlier than age 59 without penalty, though you cannot withdraw any additional profits made at that time.)

The other reason a Roth IRA is flexible is because it allows you to invest your retirement money in a number of common investments like stocks, bonds, mutual funds and certificates of deposit. You can choose how you wish to invest your money based on the methods you believe will be most profitable.

And, unlike a traditional IRA which typically requires that you take out your money starting at age 70, Roth IRAs don’t force you to make withdrawals. So if you don’t want to touch your funds until, say, age 80, then you’re free to make that decision. You can also leave a Roth IRA alone entirely and pass it on to an heir without penalty.

Roth limits
There are some limits to retirement savings with Roth IRAs. Here are the qualifications for this type of account:

• You must not make more than $110K annually if you’re single or more than $160K annually if you’re married.

• You must earn a minimum annual income equal to your Roth contributions. For example, if you earn only $5K a year, you can only contribute $5K to a Roth IRA.

• Roth IRAs are usually viewed as secondary retirement savings accounts, so there are limits to how much you can contribute at certain ages. In 2007, for example, a person under the age of 50 could contribute $4K annually to a Roth, and a person at least 50 years of age could contribute $5K. (The limit is higher for older people because they are closer to retirement and presumably need to start saving more aggressively, though limits change all the time. In 2012, a 35-year-old could contribute $6,500, for instance.) Check tax laws to determine current limits.

Important things to remember
You can select the financial institution, such as a bank or credit union, or the mutual fund company that will handle the money you contribute to a Roth IRA account. The deadline for contributing funds to a Roth IRA account is the tax deadline, April 15, of the following year. If you contribute more than IRA limits allow, you will have to withdraw excess funds prior to filing your taxes for the year. If you fail to do so, you’ll face a penalty.

Another thing to remember is that IRA contributions aren’t tax deductible. For some people, this is a drawback. However, there are no taxes taken on the earnings upon withdrawal later, as long as the Roth IRA — and its holder — are mature. This fact is a major advantage because, typically, the Roth IRA account’s value grows exponentially by the time the funds are needed for retirement.

Now that you know the advantages of the Roth IRA, start planning now to make your contributions this year! The earlier you start saving, the better off you’ll be financially later in life.

Photo Credit: Shutterstock / Cheryl Casey