How to improve your credit rating
If you have recently applied for a loan and have been rejected or received a loan offer with a startling interest rate it could be because of your credit rating. In today's tight financial market if your credit rating is less than stellar you may not be able to take out a loan or if you do you may find that it can cost you plenty. But do not despair there are things you can do to improve your credit rating. While there are no overnight fixes with a minimum of good credit behavior you will start to see an improvement in your credit rating. Here are some tips on how to improve your credit rating-
1. First of all be sure and order a copy of your credit report. It is crucial that you get a report that details your credit history from all 3 credit reporting bureaus because the information can vary significantly from agency to agency. Review it carefully because you may find errors that can be easily corrected and this can raise your credit rating significantly.
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2. It is very important that you pay all your bills on time. This is the most important step you can take to raise your credit score. Your credit rating is made up of several different factors with the largest factor at 35% being whether or not you pay your bills on time. The longer you have paid your bills on time the better this part of your credit score will be. If you see something happening that will permit you from paying your bills on time be sure and contact that lender to work out payment arrangements before they report you to a credit bureau. Most lenders are willing to work with you and just want their money.
3. Do not open a bunch of new accounts. This is especially harmful to your credit rating if you do it over a short period of time. If you are looking for credit shop over a short period of time because your credit rating distinguishes between searching for credit for a specific loan or line and searching for lots of different credit lines.
4. If you want to improve your credit rating open up a few new credit accounts, use them responsibly and then most importantly pay them off on time. This demonstrates to anyone reviewing your credit rating that you are taking a responsible stance on using credit. It is important to understand though that lenders view your credit history as about 15% of your total score. While this might not seem that much lenders will be weighting heavily whether you have a longstanding credit history or not.
5. One way to improve your credit rating is to keep your balance low in relation to your available credit. Financial experts recommend keeping your balance between 25-50% of your total credit limit. This part of your credit rating makes up 30% as it measures the amount you owe relative to the total amount of credit you have available. A consumer who is close to the maximum credit limit is deemed to be a higher risk by the lending agency. Creditors see this person as someone who will have late payments in the future. Avoid this at all cost.
6. Work on paying off your credit card debt rather than moving it around to lower rate cards. While it can be tempting to move balances to other credit cards if you close out the old account this can hurt your score because it can change the ratio of your total credit card balances to your total available credit lines.
