Posts Tagged ‘improve credit rating’

5 Steps to Boost Your Credit Rating

You are probably in one of those moments when you are fantasizing about laying your hands on that swanky car you saw last week at the auto dealership. Then all of sudden, a pesky thought about your recent bad credit run ruins your mood. You know you cannot get your banker to endorse the car purchase for that reason. Or that you got a splendid credit record and want to better it and thus take advantage of low interest rates. All in all, this article offers you a few insightful tips on how to improve your credit rating.

Step 1: Obtain your Credit Report
Even though you may find it a bothersome task, the first concrete step you should take to repair your credit is to order a copy of your credit report from the three credit bureaus; TransUnion, Experian and Equifax. A brief review of the report can help you identify any accounts that you didn’t open, or those with errors or mistakes. Identity thieves can use your personal information such as social security and bank account details for their own selfish gains. Once you find anything out of the ordinary, it is imperative that you take steps to file a dispute through the credit dispute process mechanism. This process is done through mail or online and usually takes a month or two.

Step 2: Get a New Credit Card
Though your credit record still looks shaky and gives you no impetus to shop for a new card or a loan, get a secured credit card. To obtain it, you should make a deposit against the credit limit. Make sure the card is listed with the credit bureaus. By monitoring this card, the bureaus may boost up your credit rating if you use it responsibly. This goes towards shoring up a positive credit payment history. Handle the high interest rates that come with the secured card by making full, timely payments every month.

Step 3: Renegotiate with Your Creditors
Sift through your statements and credit records to identify delinquent accounts such overdue interest payments and credit card accounts. Pay up on your loans or renegotiate with your banker to prevent them from sending your records to collection agencies. You can also reach an agreement with the collection agencies know as “pay-for-delete”. In this case, the agency enters to de-list an account from your credit score if you agree to pay up any balance on that account. This can also apply to any charged-off credit card accounts.

Step 4: Handle Responsibly Healthy Accounts
The next step to boost your credit rating is to cultivate accounts that are in good standing, as they help overshadow bad ones. Through regular payments, creditors will build up a profile of you as a person who is capable of meeting his debt obligations in time.

Step 5: Document Agreements
Document any loan renegotiations to act as defense against creditors may renege on earlier agreements. This shields you from being levied high interest rates on loans.

Improving Your Credit Rating

Our credit rating is important because it affects how much we can borrow. Anyone can check their credit score using a credit reference agency but for many people the first hint of potential trouble might come when they are rejected for a new financial product due to a poor rating they didn`t realise they had.

In the current economic situation access to credit has been tightened making it more vital than ever that you ensure you have the best possible credit rating.

If you have a County Court Judgment against you, any defaulted payments or bankruptcy orders then your credit rating will be affected.

Even something you might think of as relatively minor such as missing a credit card payment or a direct debit or regularly exceeding your overdraft can all contribute to a low score that could cause you problems the next time you try to obtain credit.

Anyone with a poor rating will find it difficult to get credit at a competitive rate, or perhaps even at all. It`s important to know if you there are any issues with your rating because it is possible to improve your score and therefore your access to credit.

Thee first thing anyone looking to enhance their rating needs to do is to ensure that any outstanding defaults have been paid off and that all existing payments are made on time.

Check that the basics are all in order – that debts are registered to the correct name and your current address, that you are on the electoral roll and that there are no mistakes on the file. All these things can disrupt your score.

One tactic to improve your rating is to take out and use store or credit cards and pay off the balance regularly. This allows you to demonstrate to lenders that you are a responsible and reliable borrower. However you need to ensure you have the financial discipline to spend only small amounts on the cards and to pay them off quickly. If you start to accumulate interest and miss payments then you will make your credit rating worse and build up debt.

Perhaps ironically someone who has never sought finance can also be turned down for credit because they have never had the opportunity to prove to lenders that they will be reliable borrowers. In this case you need to take out a financial product like a credit card, regularly use it and pay it off every month to start building a good credit history.

Be aware that if you make lots of credit searches in a short space of time it can damage your rating. To avoid this space out your applications for credit, insurance products and mobile phones, amongst others as they can all leave search marks on your file. If you move house it can also have a negative impact on your score so apply for important products before you move to prevent possible rejections.

Getting a loan for bad credit applicants should still be possible. There are lenders who have products available for people with an adverse credit history. Anyone applying must be over 18-years-old and be employed. Remember that the rates will have a higher APR than standard loans.