How to Raise Your Credit Rating

Your credit score is the foundation of any major purchase in your life. This necessary number, which ranges between 300 and 850, determines the interest rate on a new car or home, as well as what kind of rates you will get on a new credit card. Understanding the importance of your credit score will be the motivating factor behind improving your credit rating.

Difficulty: Easy

Instructions

1. Make all bill payments on time, including utilities, car payments, and quarterly and monthly payments so you can create a positive credit history. Being timely with your bills is the best step you can take to raise your credit rating.

2. Apply for credit if you can manage it and don't have a lot of it already. Those offers at department stores that will immediately give you 10% off your purchase can be a good way to raise your credit score as long as you have the ability to meet the monthly payments.

3. Keep away from maxing out your credit cards because most creditors like a person to carry at most, 30%, of their available limit charged up and carried month to month. When your cards are not maxed out you will also feel more in control of your finances.

4. Sign up for periodic credit reports from your credit card or bank. Not only will you be able to see your rating improve, you will be able to notice any unusual activity or mistakes that get onto your report.

5. Pay over the minimum on your balances each month. Carrying a balance keeps you on the credit bureaus' books, and that history looks even better if you can pay a little bit more than the bare minimum.

6. Get a co-signer. Although having a good friend or family member on record with you may not be in your comfort zone, consider that their good credit will benefit you if your name is on the account.

7. Keep track of how many credit cards you have and close cards that you don't use or think you will use by calling the number on the back of the card. Check your credit report to make sure that the closed account gets reported.

Tips & Warnings

• Remember all the elements that can affect your credit rating, like opening too many accounts at once or in a short time span, state or government judgments or liens against you (i.e., public records) and late payments.
• Be patient. Raising your credit rating takes years. Do what you can now, but do not wait until your rating is perfect before you live your life.
• Be sure to keep an eye on your credit report. Identity theft could be the issue behind a low credit rating.
• Some of the companies that claim that they can fix your credit will only create more debt for you. Ask a bank or a financial advisor whom you trust for ideas about fixing your finances before you resort to calling the quick fix companies.