Improving Credit Rating

How did you find out your credit rating was not what you thought it was?  Was it when you were denied a loan you thought you would get?  Was it when you didn't get that great interest rate on a car you saw on TV?  Worse yet, were you denied a job because they saw you as a security risk?  Any of these can happen to you without warning if you are not paying attention to your credit rating.  There is no excuse to get caught of guard and none for not doing something to fix it.  There are, however, a few myths that get people into trouble.  You need to avoid those.

The biggest myth is that you should carry a high balance one your credit cards.  This is totally not true.  In fact, you should keep your balances below 35% of the limit.  The bank knows you know how to borrow money; they want to know if you know how to pay it back.  To that end, make your payments on time to keep a good payment history.

The second myth is that having lots of credit card improves your credit rating.  This is not true.  This is for the same reason just mention.  If you do not use a card, close out the account.  You only want a few cards with a good payment history.  On your end, this also makes it easier to keep track of your debt and even helps prevent credit card fraud because the more card numbers you have the more card numbers you can have stolen and the less likely you will notice.

Perhaps the best thing you can do for your credit rating is to keep track on what is on the reports the “Big 3” generate.  Those would be the 3 companies that generate credit reports.  They are Equifax, Experian, and TransUnion and they all have to give you one free copy of your credit report per year if you ask for it.  There is no reason to pay a company to do that for you.  Making sure they are accurate is the best way to stat improving your credit rating.