Credit Rating – What Can I Do To Bring It Up?
If you are looking to gain some credit such as a new credit card of perhaps a loan, but you find that your credit rating is affecting your ability to attain this credit, what is there that you can do to change this situation to be more in your favor? Credit rating, otherwise known as a FICO score in the United States, are based upon a scale of between 300 and 850. In this case the higher the better.
If you have a rate of lower than 620 them I’m afraid you will be deemed by potential lenders as a higher risk to them and thus you will be either offered less than you would be if you are quite a bit higher than this mark. In fact, the lower you are below this score then chances are good you will really struggle to get a loan or a credit card, or any almost other form of credit for that matter.
On the other hand, if you score above that mark of 620, then you are seen as lower risk and thus will be offered better terms and conditions on any credit and what is on offer to you will be much more flexible.
Fairly recently, the Consumer Federation of America undertook a study and found that if every credit-worthy person in the US were to bring their credit score up by as little as 30 points, then the amount of credit card bills paid annually would drop by a whopping 16 billion US dollars!
To put this in a more personal perspective, if you were scoring at around the 620 mark, which is borderline for a poor credit rating, it would not be difficult to raise this up those 30 points to then bring you up to what is now perceived to be very nicely credit worthy. So, let us now take a look at how these ratings are actually balanced out and tallied together.
# do you pay your credit cards or bills on time? This makes up 35% of your overall credit ratings.
# how much do you owe on credit currently? This makes up a total of 30% of your rating.
# how long is your credit history – generally this means the older you are the better your rating, although not entirely necessarily so. This adds up to 15% of your rating.
# what type of credit you have been using – some types of credit use is rated higher or lower than others. Equates to 10% of your rate.
# what sort of and how much credit have you recently applied for? Invariably affects your ratings to 10%.
So, just by looking at those points above, its fairly obvious where you need to focus the most to get your credit card score on the rise. First off, make sure to pay your bills on time. Secondly, do try to maintain your balance on any credit cards at a manageable level, ideally below 50% of the card allowance. Thirdly, if you have any cards that you do not use, then its best to dispose of them. Each small thing that you do will soon make a difference so its wise to be methodical and plan credit use carefully.
Its not the case that you have to have the very best credit rating to be offered some really excellent terms and conditions to loans of or credit cards. Anything above 720 and you are in really good standing.
And do remember that 720 is not so far off the 620 mark where you would perhaps struggle to even be offered some forms of credit, let alone be it on good terms. Try to plan ahead with your finances and keep within your own spending capabilities – only spend what you can afford to. This way you will be doing yourself and your credit rating a really decent favor indeed!
Learn more about credit card help and a debt consolidation program to suit your needs.
Tags: credit, Credit Card Help, credit cards, credit score, debt, Debt consolidation program, finance, money