How To Improve Your Credit Rating

Credit is one of the hardest things to get, yet one of the easiest to lose.  Once you're established a good credit rating, it's important to keep it, and that does take a lot of work and careful planning.  Unfortunately, most banks and credit lenders don't really consider having a bad stretch of luck or having tight finances for a spell as a good reason for not paying your bills, which will in turn harm your credit rating. 

Before you can figure out how to improve your credit rating, you need to know just what will harm it.  If you know what the credit bureaus and lenders look at, then you will have a better idea of just what your should avoid when trying to get your credit in the green to begin with.  Here are a few things that credit companies look at.

• Make your payments on time, and for the highest amount your can.  If you just pay the minimum, it really does look bad.
• Keep the number of credit cards you have to a minimum.  If you have more than three, get rid of some, and try to only keep one with a balance.
• Loan payments, such as those for cars and houses, should never be late.  It also helps you more to pay it off on time, rather than early.
• Keep old credit, as it shows reliability.

If you follow all of those general guidelines, you should have a decent credit rating established.

How To Improve Your Credit Rating

It does wind up happening to everyone once in a while.  You may miss a bill, or have a bad few months where money is tight.  Unfortunately, those bad months won't show up on your credit history, but missing payments will.  If you are in this case, these tips will help you figure out how to improve your credit rating before it gets too bad.

To begin, make sure you pay what you can, if you can.  Those tough months may be tight, but if you can make a minimum payment, you should do so.  No matter how small it may be, it will be taken into account that a payment was made.  This will look better on you since it proves you're not trying to duck out on a balance.

After you've stabilized your finances, you should request a credit report.  This displays your entire credit history, and contrary to most common beliefs, you are entitled to three a year without harming your credit.  If you take more than those, you may wind up causing damage to your credit rating.  Once you have you credit report, you can begin to examine how to improve your credit rating. 

Make sure your note how many lines of credit your have open, and you should close any you don't intend on using anymore.  A good rule of thumb is to keep your oldest credit card, a high balance credit card and a low balance card.  This is more for you than your credit rating.  The older card proves you have had credit for a decent amount of time, the large balance card is for large purchases ONLY, and the small balance card can be used for day to day functions, when needed.  All other credit lines should be closed. 

After you've straightened this out, you're well on the road to figuring out how to improve your credit score.  You should then go over your credit report with a fine toothed comb, locating every negative mark on it.  These could be missed payments, defaulted loans, late payments, or possibly things you didn't open (a sign of identity theft).  All negative you cannot direct back to you need to be disputed immediately, and removed from your credit report.

While still keeping up with loans, you will need to pay down your credit card balances.  While it is best to keep all cards paid off, we all tend to carry over a balance now and then.  Try to make sure you keep the balance at lower than 30 percent of your maximum balance.  Anything higher will hurt your credit rating. 

If you only have a few blemishes that are harming your report, ask you lender for a goodwill adjustment.  Many creditors that you've been fairly faithful too, and have a good payment history with, will remove one late payment or so if it is requested in writing.

After you've done all this, you will need to keep up with your bills as best you can.  That's how to improve your credit rating.