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Improving Credit Rating

Improving Credit RatingCredit scores can seem baffling. Indeed, the credit rating industry has a stranglehold on your financial life with some pretty nonsensical rules. With bad (r no) credit, it’s next-to-impossible to get a mortgage, get an auto loan, or finance much of anything.

You can thumb your nose at the industry, but it’s unlikely to do you any good since almost all lending institutions have bought into the credit bureau mantra and system.

If you need to improve your credit rating the rules are pretty straight-forward. Here are the steps to take to boost that credit score once and for all:

  1. Pay Your Bills On Time
    Create a simple system that allows you to keep up on your bills and pay them on or before the due date. Consider setting up automatic payments through your bank.
  2. Dispute Credit Report Errors
    You may be surprised to find out how many erroneous entries appear on your credit report. Document all errors carefully and contact the credit bureaus with the information.
  3. Don’t Max Out Credit Cards
    While using credit is actually better for your score than paying cash (stupid!), keeping balances low and never approaching your credit limits is necessary.
  4. Apply for New Credit Rarely
    Every time you apply for credit and your report is pulled, this information is recorded on — and negatively impacts — your credit score. Another inane reporting scheme, it attempts to show that if you’re applying for credit, there must be something wrong.
  5. Leave Old Accounts Open
    Closing a whole slew of unused accounts seems like a good idea and a way to clean up you history. Unfortunately, doing so will usually negatively impact your utilization ratio (the amount of total debt divided by total available credit). In addition, closing the oldest accounts (even if unused) will shorten the length of your credit history.

If you need to make sure your credit rating is up to snuff, grab a free credit score online and get started putting your financial house in order.

{ 6 comments… add one }
  • Renee May 17, 2011, 12:03 pm

    Great tips on helping credit scores. We can’t do much without a decent score these days, so anything to help out is help wanted. I like to use my credit cards for small purchases like gas or groceries because then I know I can pay the balances off on time and not stressing out when I see the bill.

  • LoveChic May 21, 2011, 7:42 am

    I usually follow only one simple rule — to pay for everything on time without a single delay which can cause grave consequences in future. And I try not to take loans in general, only a mortgage.

  • Techlinking May 26, 2011, 11:57 am

    I always pay for my bills on time.
    Techlinking recently posted…Samsung must submit their future product designs for AppleMy Profile

  • Amy July 5, 2011, 3:19 pm

    These should all be common sense tips to live by, however, the pleasure to spend will get the best of us. Your last tip is important because I think most people think about closing their card in order to get the debt out of their life. Keeping it open will actually help build your credit. So pay if off and cut up the card in order to prevent future spending.

  • FFC June 26, 2012, 12:25 am

    There are many ways where we could have a better credit rating to improve our finances just like the ways that was mentioned in this blog. Simple yet something that we often forget to do. This article is a good reminder for us on how to make the most out of our finances not only for individuals but for business owners as well.

  • Ana November 21, 2012, 9:13 am

    The easiest way for me to improve my credit score has always been getting a couple of different credit cards with low credit limit, especially store cards such as Macy’s or Brandsmart’s and then using them to buy low cost items, paying the full balance at the end of each month. These cards are very accessible, almost anybody can get them, no matter what your credit score is.Some of my friends do the same and this strategy also works for them.

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