Monday, January 7, 2013

How Do You Improve Your Credit Rating or Credit Score?

So you have borrowed a certain sum of money you could not pay for in years. Interests were gained and these furthermore added to the pile of debt. Just when you hit a jackpot in the lottery and managed to clear your debts, your bad credit history has already been recorded by many financial institutions and banks. From this day forward, you have a bad name in their record.

Now you are ready to purchase another huge asset which requires a loan, or you want to sign up for a new credit card. Problem is, the bad credit rating is kept and maintained in the records of these companies. How do you improve your credit rating?

Answers and steps are easy. They are achievable!

Don't you worry! You only need to be more vigilant in ensuring yourself a higher rating this time 'round. At least, you are supposed to maintain a good level of rating to decrease the chances of you being rejected for your application.

How is Credit Rating Kept?

For one, you would want to know how your credit rating is kept by the lending and selling companies. Well, you have to learn that there are rules owned for them to calculate your credit worthiness. There are no fixed criteria but in general; they get the highest credit score submitted to them by a lot of companies. 

The credit score rating here includes the details of your current application. They will deduce if it's possible for you to pay now to make sure they won't be chasing you for life later on.

How to Get a Better Credit Rating or Credit Score

1. Register your landline phone.

Having your landline phone registered in your name will get you a better credit score. This is because you are allowing yourself be tracked and not really hiding away from the authorities who can put you in question. Giving them the access to contact you will keep them better in peace.

Registering your name in your phone line also proves that you are a responsible citizen. But do this only when you don't have any pending debt in your name.

2. Stay in only one residence.

Moving houses frequently will give the auditors the impression that you don't have money to pay for your current thus you move into a cheaper place, and then you don't have sufficient income again and move to another one. The reason could also be that you are running away from debts; that's why you keep on shifting residences.

Regardless the reason and even if you don't mean to change your house address a lot, doing so negatively impacts your credit score. So if you have been staying in one residence for a long time, you have more chances of improving your credit rating.

Oh, it's easy to track the number of times you change addresses. From your mortgage loans, bank accounts (billing address is recorded), credit cards, mobile phone plans and insurances, all these companies can send your credit rating to the credit bureau.

3. Get into a regular paying job.

Your credit rating will be adversely affected when you don't have a regular paying job. Income will not be reflected as stable. So it's not advisable to be a real estate broker, a self-employed individual or someone who earns money only by commissions. You cannot be sure you can pay for the debt for another month. Also, keep your unemployment months at a minimum!

4. Sign up with a credible guarantor.

If your guarantor is Bill Gates, Oprah Winfrey or just a regular someone who has credible background and good financial and credit record, you can improve your credit score. This guarantor is the person the lending company will vouch out for whenever there's a mishap in your payment capability.

One way to prove that you have a good relationship with this guarantor is to set up a joint bank account with this person or co-sign a tenancy contract of an apartment. The credit score report of this person will also be checked, so his background must be thoroughly clean else it will lower your credit rating further.

End Notes

You cannot delete your past associations and pitfalls, but you can turn them into something more positive by doing these four steps. Also, be alerted with discrepancies in your information. Crediting agencies are very meticulous in the health of the credit score with consistent accurate personal information.