So how can you work to improve credit rating? It's a bit of a chicken and egg scenario. A good credit rating will help you get the loans and credit cards you need. Then, being responsible with your loan and card payments will continually improve your credit score.
Here are some ways to boost your credit rating.
One of the first things to consider when trying to improve credit rating is your payment history. Do you make regular, on-time payments on your credit card and other loans? Or does a due date happen to slip by every now and then?
If you do miss a payment or two during the year, it is one of the
costliest mistakes you can make in terms of your credit rating. So fixing this issue should be your first priority.
Figure out ways to send in that check on time, every time. Set up automatic bill payment or a bill reminder. If it is helpful, consolidate your debt so you have only one bill to pay each month. And, seek debt management help if you think it will benefit you.
Are most of your cards close to their limits? That's a problem. Reduce those balances. If you have both credit card balances and installment loans, work on your cards first. Bring your balances to less than 30 percent of your credit limits. In addition, don't keep using those cards while you are working on debt reduction.
in a hurry to close credit card accounts that finally have zero
balances. While it took a tremendous amount of effort for you to whittle
down your outstanding balances on these cards, keep at least one or two
open accounts with zero or near-zero balances
to improve credit rating.
Your Oldest Credit Card
Your oldest credit card can be gold in terms of your credit rating, especially if you have been consistently responsible with your spending and payments. Don't voluntarily delete good, "gold" history by closing an old account, unless you have a good reason to do so.
Keep using your old accounts every now and then. Yet, always remember to make your payments in full each month.
If you don't own a credit card, it might be a good idea to apply for one and start using it. Having the charge card will enable you to establish or supplement your credit history and improve credit rating quickly through conscientious use.
Remember to make your payments in full, on-time, every time. Don't use credit when you can't afford to repay what you spent by the end of the month.
Already have a few cards? Make the next loan you need an installment loan, if possible. Mixing different types
of loans can help increase your credit rating. Yet don't apply for loans you don't need, or can't afford to repay.
Too Many Cards?
If you have too many cards, don't apply for just one more. As noted above, an installment loan may make sense for your credit score – but only if you need the money.
Don't keep applying for new credit just because you received a pre-approved offer or to get that extra 10% discount at the retail store counter.
You may even consider closing a few relatively newer cards if you have too many of them. Just keep a couple of cards open with small balances that get paid off each month.
Follow these tips and you will begin to see your credit score increase over time.