The importance of a good credit score can never be understated. Whether you want a loan with low interest and large amount, a gold or platinum credit card, mortgage at good terms, car loan at cheaper rates or simply have a good financial credibility -- none of it can be achieved without having a good credit score. There is no instant solution to get a good credit score. It builds up gradually based upon how well you manage your loans and financial situation. However, the credit score can degrade at quite a rapid rate if there are consistent defaults on loan and credit card bill repayments. Repairing the credit score is not that difficult provided you take these 5 simple steps into consideration.

1. Check your credit report regularly

This is a must to ensure that you know your current credit score, and what is ailing it. If there are any inconsistencies in your credit report get them corrected. Keeping bills of all the transactions you make can be very handy and helpful in correcting any errors in your credit report.

2. Get rid of those extra credit cards

The temptations to own a new credit card are so numerous in modern times that many of us end up with a purse-full of them without any real need. They stay there and cause a lot of problems in repayment. The confusion that comes with too many credit cards can easy lead to a missed payment and resulting penalties. Frequent defaults will reflect poorly on your credit score. So, keep only the necessary and discard the rest.

3. Repay on time

Every credit card transaction is a loan that has to be repaid on time with interest. Don't ever miss out on any repayment. If you are not able to make full payments, make half, or even the monthly minimum, but don't default. This will keep you in the good books of credit card company and help your credit score. If you are not able to pay anything to the credit card company, don't shy away from them, call them, explain your problem and work out things so that a negative report doesn't land up with the credit reporting agencies.

4. Keep your debt to balance ratio low

A low ratio means that you are repaying on time. This factor has carries a lot of weight while determining your credit score. A low debt to balance ratio goes in your favor while it hurts your credit report badly when this ratio is high. The high ratio says that you are not able to manage your finances well, borrow more than you can afford, and the repayment is not up to the mark-- in short a good candidate to accumulate a lot of credit card debt. Always, avoid giving this impression to the credit card companies.

5. Report emergency situations to the credit card company

We all have emergencies, an accident, a death of loved one, a serious illness- it could be anything. Such situations take a serious toll on our mental and financial health. Credit card companies are aware of such situations and act compassionately if the matter is reported to them. If you face such a situation report it to the credit card company immediately, and explain your situation. Tell them clearly how much time you need to recover from the situation. An amicable solution can be worked out with the credit card company so that the ramifications of this emergency situation doesn't reflect badly on your credit score.

Nothing beats good financial habits in keeping a excellent credit score. However, fixing a bad one is not difficult either all it needs is a bit of commitment and resourcefulness. The above 5 tips will help you repair existing credit score and keep it in good shape for future.