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How To Improve Your Credit Rating

What affects your credit score? The two biggest factors in determining your credit score are the number of late payments that you have and the amount of debt you owe compared to your credit available. Let’s take the first one. A payment will affect your score if it is more than 30 days late. Your score will suffer more if the payment is 60 days late and then 90 days late. If a payment goes to collection then you will see a huge drop in the score as well, it is basically a step by step process. So how do you improve credit ratings? The simplest step is to pay on time. Never let a payment be posted more than 30 days late.

The second factor is a little harder to understand. Credit bureaus determine a big portion of your score by weighing how much money you owe as compared to how much available credit you have. The simplest way to understand it is this; if a person has a credit limit on a credit card of a certain amount, the closer you are to the maximum amount on the card, the worse your score will be. So how do we use this to improve credit ratings? Keep the balance of your credit cards to at least 50% of your credit limit. A maximum of 35% would be even better it possible.

In the big picture you can improve credit ratings by practicing the steps above but just as importantly is changing the factors that caused the problems to begin with. Getting a better score will not last otherwise and there has never been a more important time for your credit rating to shine.

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