Your credit rating score represents your history of borrowing and repaying money. When you apply for credit, the lender will look at your score to decide how great the risk is that you won’t pay them back. A good credit rating allows you to get credit more easily and pay lower interest rates. Some employers have pulled potential employees’ credit reports to determine their reliability, and others use it to decide whether you should be granted access to sensitive information.
Whatever your score is, you can raise it. Follow these simple steps.
1.) Know what your score is. The three reporting companies are required to send you your report free of charge once a year. Stagger them, so you get a report every four months.
2.) Pay all of your bills on time; credit cards, utilities, loan payments, etc. Your payment history represents the single largest factor in your credit score. It counts for 65% of the total. Focus on paying the right amount to every company every time.
3.) Don’t let yourself get maxed out. Keep two, maybe three cards, not a lot more. Pay them down, skimping for a while if you must, to get to where your debt on each card is no more than 30% of the max. It doesn’t look good to a lender if you are close to the edge.
4.) If you can, stay at the same job and the same home. Stability looks good on a credit report.
5.) Don’t change accounts frequently. Closing accounts and transferring balances gives you a short-term negative on your score, especially if you do a lot at once.
6.) Credit inquiries, made whenever a company checks to see if you are credit-worthy, also represents a small short-term negative hit on your score. It suggests you are looking for money to borrow. To minimize this, don’t apply for new cards or loans a lot; shop for a while and apply when you need to. This isn’t much of a factor, so don’t worry about it much.
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