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Why You Need A Good Credit Rating
Do you know how to build, maintain, and improve your credit rating? Having a good credit rating means having access to additional credit when you need it.
Good credit rating can help you to:
- Finance a car
- Rent an apartment
- Get a home mortgage
- Set up utility accounts
- Obtain employment
If you have a poor credit rating you may find it more difficult.
Building Good Credit
To build good credit, there are several steps you can take, including:
- Open a checking or a savings account
- This is a convenient way to pay your bills and is particularly important to prospective landlords who expect to receive rent checks each month.
- Open a retail store account
- Stores often have special offers enticing you to apply for their credit cards. The interest rate on this type of card tends to be high, so you may want to charge very small purchases that you can afford to pay in full each month.
- Ask a family member or friend to co-sign a loan for you
- Making regular payments shows creditors you are a responsible credit consumer. After 6 months to 12, you may be able to apply for credit on your own.
Maintaining Good Credit
Once you've established a good credit history, it's vital that you keep it that way. Keys to maintaining good credit include:
- Pay your bills on time
- This is the single most important factor to maintaining good credit. Creditors want to be certain you can pay at least the minimum due on time each month.
- Wisely Use
- Be careful about charging up to your credit limit on credit cards. The minimum payment each month will be large, and you may not be able to pay down the debt. Also, when there's no available credit on an account, you can't use it for emergencies.
- Income and Debt Ratio
- If your debt to income ratio is 20% - 30%, it's time to take a hard look at your finances. Your debt to income ratio is generally defined as your regular monthly bills (excluding rent or mortgage and utilities) divided by your gross monthly income.
- Keep your open credit accounts to a minimum
- Do not Destroy card without contacting the creditor as it does not close the account.
- If you have a number of credit accounts open, your future creditors may be alarmed at the large combined open credit line. If you don't plan on using an account, be sure to close it with the creditor.
- Check your credit report regularly :- Creditors evaluate your financial health by reviewing your credit report, so be sure it's correct.
- Avoid bankruptcy
- Bankruptcy can stay on your credit report for as long as 10 years. It is often considered the most negative aspect of a credit profile, so don't make the decision to file without carefully considering your alternatives.
Improving Your Credit Rating
If you're had financial difficulties that have negatively impacted your credit rating, don't despair. You can take steps to improve bad credit. Keep in mind that you can't erase bad credit, but you can replace it with good information.
- Secured Credit Card :- Many credit card issuers will offer you a secured credit card regardless of how poor your credit may be. You'll need to place a certain amount of money on deposit as collateral, but over time you'll demonstrate a good payment history and will qualify for a regular credit card.
When you need additional credit you will be able to get it if you follow the steps outlined above. |
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SignUp Requires
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