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Credit Rating – What Can I Do To Bring It Up?
If you are in need of credit and particularly if you are on a low credit rating – otherwise known as FICO in the United States, then there are some things that can help you and are worth knowing about. Credit ratings are based on a scale in the US – the lowest rating is 300 and the highest possible is 850.
If you have a rate of lower than 620 them I’m afraid you will be deemed by potential lenders as a higher risk to them and thus you will be either offered less than you would be if you are quite a bit higher than this mark. In fact, the lower you are below this score then chances are good you will really struggle to get a loan or a credit card, or any almost other form of credit for that matter.
If however, your score is higher than 620 then you will be perceived as a lower risk candidate and thus will be able to attain the loans and cards that you wish, within reason at least.
Just to shed a little more light on the importance of the credit points system – recently the Consumer Federation of America did some research upon the point system. They found that if everyone in the United States who is at all credit worthy (meaning old enough to attain credit) were to improve their own credit score by a mere 30 points, then the credit card annual bill for the whole of the United States would drop by a rather huge 16 billion dollars!
It would not be such a difficult exercise to bring your score up from say, 620 to 650, and thereby you will be going some way to really improving your credit rating just by doing this. To bring this up further though requires a bit more effort and a bit of knowledge too. Lets see how the credit ratings are worked out, shall we? The way your ratings are calculated are as follows…
* the history or your payment such as being on time or otherwise = 35%
* the total amount of money you currently owe on credit = 30%
* total length of your credit history, so if you are older this does tend to be better = 15%
* the recent type of credit you have used = 10%
* the recent credit you have applied for = 10%
So, just by looking at those points above, its fairly obvious where you need to focus the most to get your credit card score on the rise. First off, make sure to pay your bills on time. Secondly, do try to maintain your balance on any credit cards at a manageable level, ideally below 50% of the card allowance. Thirdly, if you have any cards that you do not use, then its best to dispose of them. Each small thing that you do will soon make a difference so its wise to be methodical and plan credit use carefully.
Its not the case that you have to have the very best credit rating to be offered some really excellent terms and conditions to loans of or credit cards. Anything above 720 and you are in really good standing.
And do remember that 720 is not so far off the 620 mark where you would perhaps struggle to even be offered some forms of credit, let alone be it on good terms. Try to plan ahead with your finances and keep within your own spending capabilities – only spend what you can afford to. This way you will be doing yourself and your credit rating a really decent favor indeed!
There is more to learn about credit card help and a debt consolidation program to suit your needs.
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