How to Improve Your Credit Rating
7th March 2011When it comes to credit cards and your credit scores, it is important to be on the good side of the rating as this helps not only with getting a credit card but also loans, an apartment, and even your potential employer might look into your credit score. The score as little as it may seem, can literally save you hundreds or thousands of pounds, this also means it will save your time trying to find a lender who will loan to you - higher credit scores don't usually get turned down. Your credit score can affect how much you will end up paying on interest for your credit card balance, car loan, a mortgage, and anything else for that matter. If you are young and just starting out financially then making it a priority to have a good credit score will do absolute wonders for your financial future.
Even if you don't see yourself getting a mortgage or a loan in the near future, it's a good idea to build a good credit score because you never know what will happen in the coming years. It is best to start young in such a case, but sometimes in our youth we make mistakes or perhaps some unfortunate circumstances struck and now you have obtained a bad score.
The first thing you want to do is to figure out where you are on the credit score. This is easily attained by a free credit report. There are many online companies and websites that are able to provide you with the current version of your credit report. Try and obtain a 3-in-1 credit report, this provides you with what information the three top credit reporting agencies have on you. This helps you understand what you are dealing with and to become aware of all the extra details you might not have known about.
Once you know what your score is figure out if you need to improve it or not. Anything above 700 is considered really good and most employers or lenders will not see you as a high risk opponent. If your score is under 620 then it is considered as bad credit and you most definitively will be paying higher interest rates than people who have scored higher than you. If you are in between, then it is still recommended you try and improve your score but it is not as detrimental to your finances.
Make sure that your credit report is accurate. Look closely and make sure your name is not spelled wrongly and that the address they have on file is up-to-date and correct. Credit reporting agencies are required by law to remove any notations or accounts which are older than seven years old. Every little detail matters in helping you with improving your score, so be sure to contact these agencies for any inaccurate information.
Paying on time counts for about 35% of your score, depending on your payment history this might vary, but it is still a good rule of thumb. You can set reminders on your calendar or cell phone letting you know in a couple of days advance when your bills are due so you are never late. While you are trying to get a good score, it is very important not to max out any more limits. Look on all your accounts and spot which ones have the highest interest, you want to be paying that one off first. If you can help it, never just pay the minimum amount with any outstanding debt, always try to put in a little more extra which in turn will help pay any pending debt off faster and reduce the amount of interest you have to pay over time.