How To And Why To Improve Your Lousy Credit Scores

Credit scores are numbers that banks use to rate whether or not they should loan a person money

, or what the maximum amount is that they can safely loan that person. The scores are created from statistical analysis of your previous credit record.

A good credit record is very important when applying for a bank loan, regardless of whether its a home loan, car loan, an emergency loan, or a personal loan for pretty much anything.

To make sure you have a good credit rating, you should apply for a credit report at a credit reporting agency. Often you get one free rating per year, so it needn't be an expensive exercise. Most credit providers use the same agencies to get your scores and once you know your credit rating, you can easily get help to improve it, or if it's okay you'll have additional peace of mind when applying for a loan.

Something that may seem strange is that someone who doesn't use credit at all doesn't actually have a very good credit rating. This is because there is no real proof of whether or not they can pay. The best way to deal with such a problem is to apply for a small account like for a cellphone, or credit card and then go about keeping it all up to date. Having an exemplary payment record on this will be very important, or you could do your credit rating more harm than good.

It is CRITICAL to pay your bills on time, and even more so within 30 days. Credit reports are based on how regularly you pay, or rather, don't pay. How often your late payments occur is compared with other people with similar repayment problems and a statistical analysis is done to come up with the score. There are several criteria such as payments after thirty, sixty days and total non-payment and repossession.

To ensure a good credit score, don't ever apply for many separate loans or credit cards within a one year period. Too many credit requests is a sign of impending financial difficulty to most lenders. Rather get a single loan for a combination of things if possible.

Your successful credit application and importantly the interest rate for repayment, can be decided by only one or two points in your credit scores. These thresholds and small differences can mean the difference between success and failure and also save or cost you a lot of money.

by: William Holland

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