4 Ways to Improve Your Credit Rating

4 Ways to improve credit score

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In this article:
  • Make your payments on time.
  • Cut your credit utilization ratio.
  • Establish a variety credit sources.

Four Things You Can Do to Improve Your Credit Rating

Your credit rating is something you should not take for granted. If left to spin out of control, it can cause serious repercussions that will follow you throughout your life. If your credit is not the best, or could use an improvement, here are four ways to improve your credit rating.

1. Make Payments on Time

If you pay your bills late, you are not only incurring late fees, but you are also damaging your credit. And if you miss a payment, it's even worse. Your payment history, even for minor items such as utilities and cable television, is reported to a number of different credit bureaus, so any missed or history of late payments is recorded and weighed against your credit. If you want to build and maintain your credit rating, pay your bills on time and do not miss any payments. If you have missed payments in the past, get back on track. Your recent payment history counts more than ancient history, so be sure to get back on track and then stay there.

2. Pay Off Your Debt

If you have debt, pay it off. Don't transfer it all to a credit card and then transfer it from card to card to card. If you just move around your debt, you're not doing anything to pay it down. And even though all your debt might be on your credit card, your credit is still in danger. So, start budgeting to pay off your debt. Pay off that credit card and your other debt payments until nothing remains. If you ignore it, it's going to haunt you for years to come.

3. Establish Credit History

Your credit rating is established partially on your credit history. Your credit history is based on the information that your creditors have reported to the credit bureaus, including credit cards, loans, and even some utility bills. If you have little to no credit history, there's nothing to go off of to establish your rating, so your credit will be established at a slower rate. There are no prior indicators whether or not you are a delinquent or on-time payer. So, if you want to build your credit, get a credit card, charge a few things, and pay off the majority of the balance. Financial experts recommend keeping your account balances less than 50% of your available credit. It shows that you have the ability to pay back your debt.

4. Do Not Apply for or Take on Too Many Credit Cards

Having and using a credit card wisely can be beneficial to your credit rating. However, if you're constantly applying for new credit cards, it can hurt your rating, especially if you're getting turned down for them. Applying for too many credit cards, in a way, shows that you don't have enough capital to afford your cost of living on your own income. And if you're getting turned down by creditors, it's an indication that your credit standing just isn't up to par, and other creditors will weigh these rejections against you.

Your credit can make or break you. Your credit rating dictates the interest rate you get on loans and whether or not you qualify for additional credit. If left to grow uncontrollably, your credit can be the death of your ability to purchase a home, a car, or even get basic cable television. If you want to improve your credit score, don't let it spin out of control. Pay off all debts, continue your credit history, and pay everything on time.

3 Comments
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  • EB
    Evan E ,
    Warsaw, KY,
    Feb, 2012
    It doesn't work. I reported a concern over a year ago, and the normal man can not repair a mistake. a false report can be made by a co and it doesn't have to be proven. I have two reports that are incorrect and have disputed both. and reporting agency refused to delete from from my credit report. The co has no record at all only the reporting agency.
    • 35x35
      Kelley E,
      Dec, 2019

      I believe the credit bureau investigates the error by contacting the creditor. If the creditor agrees to change what they reported, then they re-report the change, and then the change will appear on the report. That's what I've been told. However, you may want to check whether that's accurate.

    • 35x35
      Daniel,
      Dec, 2019

      If you dispute the debt and the creditor tells the credit bureau that the debt is legitimate when you know that the creditor can't prove it, you can sue the creditor. You can do this without any out of pocket expense, if a lawyer who handles Fair Credit Reporting Act violations feels he or she can successfully sue the creditor. Speak wtih a lawyer and discuss your bassis for asserting that the creditor has "no record at all" of the account. 

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