3 ways to improve your credit rating

December 17, 2020 at 7:00 AM
3 ways to improve your credit rating

Your credit score can go a long way to helping you get the funding you need for a new car, new home, or even getting a new job. It’s important to keep track of your credit score and do what you can to maintain a good score for your needs. At DebtHelp, Inc, we understand that it’s not easy for everyone to always have a good credit score, so we’re here to help. If you’re curious how you can improve your credit rating, we’ve put together a list of three ways that you can.

How credit rating is calculated

Before we get into our list, let’s take a look at what goes into creating your credit rating, specifically your FICO score. Why should you know your FICO score? As many as 90 percent of lenders use your FICO score when deciding eligibility for financing. Your FICO score is calculated as follows:

  • Payment history: 35 percent
  • Credit usage: 30 percent
  • Credit mix: 10 percent
  • New credit inquiries: 10 percent
  • Length of credit history: 15 percent

With each of these in mind, let’s look at what you can do to improve your credit rating.

Pay bills on time

As we established above, your payment history is the most critical aspect of your credit rating. You can make a positive impact on your credit rating by simply paying your bills on time. This includes your utilities, cell phone, car payment, credit cards, and whatever else you have. Paying your bills on time is a great way to show your dependability when taking on new debt in the future.

If paying your bills on time isn’t an issue, you can take this a step further by making more frequent payments. You can display your ability to make payments by paying your credit cards, mortgage, or car payment twice a month. These additional payments don’t have to be as much as your monthly minimum. Make what’s called “micropayments” where you allocate small amounts of extra money to those debts.

Pay off debt

Don’t accumulate massive amounts of debt. If you have debts, make concerted efforts to pay them off. Your score will continue to improve as you pay off your debts and keep them low. If you are using 30 percent or less of your available credit limit, you’re on the right track.

Once you’ve paid off your debts, keep them low. You don’t need to keep your credit card balance at zero, but you can maintain a strong credit rating by minimizing credit card usage once they’re paid off. By keeping credit limits high but debts low, you’re continuing to minimize your debt usage.

Correct credit report errors

Your credit report includes more information than just how well you pay off debt or handle your bills. Information like where you live and whether you’ve been sued, arrested, or filed for bankruptcy is also included. You can improve your credit rating by checking your credit report and correcting errors. Update your address as needed and get a bankruptcy removed if the proper amount of time has passed. Bankruptcies are removed from your report based on your filing. Chapter 7 bankruptcy is removed after 10 years, while Chapter 13 is removed after seven. Verify that these are removed once the appropriate amount of time has passed.

You can also verify credit inquiries and protect yourself from identity theft. If there are any reports that are inconsistent with your credit activity, take the appropriate steps to ensure that those are removed.

Get started with DebtHelp, Inc

Get started on the path to a brighter financial future with DebtHelp, Inc. Our team is ready to help you create a debt relief program to improve your credit rating. Reach out today to get started.