3 Aug 2006
So you realize that you have a credit rating and that you will have to rely on it for several things in life. So how do you get the best credit rating? Well hopefully you realize this early on before you hurt your credit rating, as it is a very long process to fix.
First off, pay your bills on time! This is a must! Banks, financial institutions and credit card companies will report your accounts to one or all three of the major credit reporting agencies, Equifax, Experian or Trans Union. They will report, when you have applied for credit by means of an inquiry. They will report the details of your accounts including, when you opened them, high credit, current balance, payment, your current standings; if your account is up to date or behind in payments as well as how you have paid your accounts in the past, showing all late payments. And they will report any derogatory accounts or activity, such as bad debts, judgments or collections. These negative types of ratings will hurt your credit report and reduce you chances of obtaining credit in the future.
Creditors look very closely at your credit reporting scores when applying for credit. The best scores are the highest, as it has been determined that the higher your score the less likely you are to default on your account. It has also been proven that active credit seekers are a greater credit risk, so limit the number of inquires done on your credit report to keep your rating up.
Another factor in determining your rating is the amount of outstanding debts. If you are maxed out or over you limit on one or more credit cards, this will hurt your credit score and not provide you with the best credit report. It would be a wiser decision to spread your debt over a few credit cards, rather than have it all on one. It is always a good idea to obtain a copy of your credit report before you apply for credit. This way you can see what the bank will see, and should you find any errors you can have them corrected before you apply, avoiding a possible turndown of your application. And to really keep on top of your credit and avoid becoming a victim of credit fraud, you can always look into monthly credit monitoring services where you will receive copies of your totally free online credit reports.
In other words, if you use your credit wisely, manage your debts, make your payments on time and do not get overextended in credit, you will end up with the best rating on your credit and you will get the best terms on your loans or credit cards.
Linda Meadley
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