4 Steps To Follow In Order To Improve Your Credit Rating

Whenever you apply for a loan, the lenders check your credit score and rating in order to decide whether or not to offer you the loan

. A person with a comparatively poor credit rating may have to experience loan denials. Even if he/she is able to obtain a loan, the lender may charge a relatively higher interest so as to cover the risk of default.

Credit rating What it means

You credit rating is actually the assessment of your creditworthiness. It is based upon the history on how youve managed your debts; that is, how much youve borrowed and whether or not you were able to repay them on time. So, you need to improve your credit score in order to get a higher credit rating from your creditors.

Credit rating How to improve it

Dont worry if your score is not satisfactory. You can follow these steps to increase your score, which in turn, will get you a higher rating thus helping you to take out loans at favorable terms and conditions.

1.Order your 3 credit reports

You should order reports from each of the 3 major credit bureaus, such as, Experian, Equifax and TransUnion. This is because not all creditors report to each of the 3 bureaus. Youre entitled to get a free copy of your credit reports every year.

2.Monitor your reports carefully

After getting your reports, examine them carefully and find out inaccurate information if any. The bureaus dont verify the information that they get from the creditors. So, it is necessary to monitor your reports at regular intervals. Look out for incomplete, outdated information along with finding out the typing errors.

3.Dispute errors if any

If you find error/errors in your credit report/reports, then dispute it/them by sending a letter to the specific bureau. You can also fill out the form supplied by the bureau. It is advisable that you send photocopy of your report and support your dispute letter with necessary documents.

4.Try to pay off your debts

Try to make your bill/debt payments on time. If youre struggling to pay off your dues, then dont incur additional debt till you repay the existing ones. If required, take professional help to pay your dues in a systematic way. Paying off debts will help to increase score thus improving your credit rating.

Even if you pay off the outstanding balance on your oldest credit card, make sure you dont close the account. Closing the oldest credit account will shorten the length of your credit history that may hurt your score. It is also advisable that you close your credit accounts slowly over some months. After closing your account, check whether or not it is reported as closed by consumer. This is because closed by creditor imparts a negative effect on your credit history thus reducing your score, which ultimately affects your credit rating.

by: Veronica flintoff

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