How To Improve Your Credit Rating

If you want to improve your credit rating, you can rest assured that you are not alone. There are millions of people who have bad or poor credit due to loans, mortgages and other expenses they haven't paid on time. Fortunately, there are ways that your credit score can be improved. Below are some tips that will help you improve your credit rating.

Pay All Of Your Bills On Time

Payment history accounts for 35 percent of your score. As long as you are making payments consistently, your score will increase. However, it only takes missing a few payments to drop your score by several points.

Reduce Debt

Your total debt accounts for 30 percent of your score. One of the most important things that you can do to improve your credit rating is reduce your total debt. If you are struggling with debt, you should not hesitate to ask a financial advisor for help. Additionally, you should also make sure that you avoid falling into the trap of making only the monthly payments. You will not only stay in debt longer, but end up paying more because of the amount of interest that is charged.

Be Cautious About Opening New Accounts

The type of credit you have makes up about 10 percent of your score. It is important to note that there is good debt and bad debt. This means that a creditor will look more favorably on a person who has student loan debt versus another person who is in debt because they maxed out their credit cards. That is why you should be very cautious about opening new accounts. Before you apply for a credit card, ask yourself, do I really need this? If the answer is no, you should forego it. New accounts make up 10 percent of your credit score.

You Can Improve Your Credit Score With Time

The amount of time that you have had your credit accounts for 15 percent of your score. This means that if you have only had credit for a few years, your score can be low even if you do not have any outstanding debt. If you are paying your bills on time, your credit score will go up each year.

The importance of knowing your credit score cannot be underestimated. If you do not have good credit, it will be hard for you to get a loan or mortgage. You may also have trouble finding a job. Fortunately, you can raise your credit score by making payments on time, reducing debt and being very cautious about opening new accounts.

By: Jeremy C. Winters

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