InfoBarrel > Business & Money > Finance > Budgeting

Improve your credit rating

Laura |

0 Comments | Rating: 0 | |

When you have good credit, you open up a lot of financial opportunities for yourself. You can borrow money to buy a house or a car. You can also borrow money to start your own small business or go to college.

Many people struggle to borrow money when they need it because they have not established a good credit rating. Whatever your need is, good credit can help you accomplish your goal.

In order to establish good credit, you need to always pay your bills by the due date listed. If you do not, the creditor can report this delinquency to the credit reporting agencies.

For each late payment they receive, your credit score will decrease. As your credit score decreases so does your ability to borrow money and if you do find a lender willing to loan you money, the higher the interest rate will be.

As you being to make payments and establish your credit history, you should request a copy of your credit report at least once a year to make sure that everything is accurately reported.

If you do not already have any credit cards, you should start by opening a checking account at a bank.

Be sure to keep your account in good standing and never overdraw your account. As you maintain your account, the bank will see that you are a good credit risk and at that point you can consult with a loan officer to see if they are wiling to issue you a credit card based on your responsibility with your checking account.

If they are still unsure about issuing you a credit card, they may be willing to issue you a secured credit card. With this type of card, you give the lender an amount of money and they will issue you a card that has the same limit.

For example, if you give the bank $500 of your own money to hold, they will issue you a credit card with a limit of $500. You can charge purchases and make payments just like you would with a regular credit card.

If you default on this secured card, the bank has access to the $500 you have given them in order to repay the card.

If you prove that you make your payments on time, they may eventually give you back your $500 and issue you a credit card.

As you make your payments on time, your credit rating will increase and you will begin to establish your credit history. As your credit rating increases and your credit history is established, you will be able to obtain more credit, better interest rates, and better terms for your credit card and loans.

In addition to making your payments on time, be sure to keep good documentation of your payment history and cleared checks in case you ever need to verify that a payment was in fact made on time.

Building good credit takes time and diligence, but ruining your credit rating is as simple as missing a payment occasionally.