Maintaining a good credit rating

Credit rating is not awarded, it’s earned. Whether you need to take a loan or credit card with bigger available amount, you will need to be “clear” in front of the bank officer with an excellent credit rating. Credit rating evaluates the creditworthiness of a debtor, it can be individual, company or government. In general, this is an evaluation of the debtor's ability to pay off the debt, made by a credit rating agency.

A time-proven fact that a “good” credit score depends on system that has been used by your lender. Different systems check and calculate by various ways but if once you’ve got good credit report from one credit reporting company, you will be lucky to have a good credit score with your lender. Looking at credit score, lender or employers evaluate how responsible you are. To determine both the interest rate and type of loan program for you lenders use significant factor - credit score. Typically, the higher the score, the lower the mortgage rate a consumer will pay. Basically credit score ranges from 350 to 900, where the higher is score, the lower interest consumer will pay.

Besides, employers use credit rating to determine whether you are going to be a dependable employee or not. It is important for them to see not only ability but your willingness to pay off a loan as well. Insurance regard the person with good credit rating as a reliable one and less capable to commit insurance fraud.

On the contrary, bad score can prevent you from spending money on such essential purchases as car, apartment or expensive trip. Nevertheless, if you understand what damages your credit score, you can make an effort to amend your credit rating.

Now we can make small but significant conclusion - good credit score is kind of diploma of your creditworthiness and it does not appear like a sun in a raining day, it’s like a plant which you need to take care about and water in time. In contrast to the world history, this history you must write by yourself.

How is it possible to improve credit rating or how to maintain it on a good level?

1) All of us know that past credit history is our ticket to new credit. The most widespread problem is a bad habit not to pay bills in time, which is better to give up before it spoils you credit score. So first of all, paying bills in time is basic for future credit rating. Always pay your individual bills within the 30 day time period (for credit cards) and originate quarterly equal payments for instalment loans (car, apartment). Set up a day when you can arrange time to pay bills, put a reminder on your cell phone calendar. If you cannot organize your money and there is always not enough money by the day you need to pay bill, try not to spend the third part of your salary till the “payment day”. And if even this does not work, set up “payment day” for yourself right the next day you get salary.

2) According to life experience, credit agencies (credit rating made by such companies) often put wrong information spuriously, listing somebody’s debts on your credit report. If it doesn’t happen to you - great, but If it does, make sure you know how to fix it for free, because it’s not your mistake. In some countries it’s available (USA for example). Any information that related to your claim about an error needs to be copied (correspondence, record of phone calls). And remember - do not send original documents, only copies. So check your credit report at least 1-2 times a year.

3) Try not to apply for credits in different banks, at least reduce their quantity. It is perfect if you have one or two credits, no more. If you have extra money, it’s better to save it and purchase what you need. Any credit is a debt, and being in somebody’s debt - not the best position in the life. Also, if you have paid all debts, consider to keep your lines of credit open. One thing consumers should avoid in trying to improve their credit rating is to close old accounts.

4) One of the most effective ways to raise your credit score is to reduce your balances on credit cards.

Your credit score is an extremely important part of your, let’s say, financial "life". We live in the XXI century when every second person or even everyone has at least once addressed the bank for credit. Insurance companies, lenders and even employers will without a doubt pay attention to your credit score and estimate your worthiness. Having a great credit score you will look responsible and even ethical in the eyes of lenders or employers. Almost all companies, especially big ones, while examining a candidate, consider an individual from the viewpoint of his credit score. Of course, it is not the main criterion, the most essential thing is your experience and skills, but it will give weight to your personality.

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