Five Tips for Improving Your Credit

Since your credit can determine interest rates on loans, insurance premiums and even job prospects, it is important to know what’s on your credit report and take proper steps to improve your rating.

1) Eliminate Erroneous Information

Many people never check their credit report. You would be surprised at the number of errors that show up on a report. It is not usually difficult to get inaccurate information off your record; you simply need to dispute each discrepancy with the credit reporting agency. If the creditor cannot supply the proper information to verify the debt, the credit agency will remove it from your report.

2) Make Payments On time

It is essential that you make all payments on time. This includes car loans, mortgages, revolving credit accounts, student loans, and any other type of bills you may have. It is also important to stay current on regular bills such as utilities, medical and insurance payments. One late or missed payment can reduce your credit score and cause your interest rates to increase.

3) Pay Off Card Balances

The ideal situation would allow you to pay credit card balances off each month. However, this just isn’t possible for everyone. You should only use half of your available credit or less. The less you use the better off you will be. If you can’t pay the balance in full each month, it is important to keep your balance well below your limit. If you’re balance is rising faster than you can pay it down, then it is best to refrain from purchases or pay with cash.

4) Avoid Excess Inquiries

Each time you apply for a loan or other types of credit, an inquiry will be made to your file. If you have several inquiries within a one-year period, this may hurt your rating. If you decide to shop around for the best mortgage and loan rates, you should do so within 30 to 45 days. Inquiries within that time frame will be counted as one inquiry and will not hurt you.

5) Ensure Credit Limits Are Reported

Credit card companies can be notorious for not reporting your credit card limit. They do this because they don’t want their competitors to view their lending habits. You should contact the company which issued you the card and tell them you want your limit to show on your credit report. If your limit isn’t reported, it can hurt you because the credit reporting agency isn’t given the proper information and may consider your highest balance as your limit. This might make it seem as if you’ve spent your available balance, when in fact, you have plenty of credit left.

It can take years to obtain good credit. All it takes is one mistake that can happen in an instant to tarnish your good standing. Maintaining a good credit rating will allow you to have peace of mind, and you will also be able to get the best rates on loans and other services.