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Improve
your Credit Rating Yourself - Tips How To Do It
A
credit score is a rating system creditors use to help determine
whether to give you credit, and how much to charge you for
it. If you have ever applied for a credit card, loan, or insurance,
there is a file about you known as your credit report which
will include your quality score rating.
It
is important to check your credit report for accuracy from
time to time. This file has information about you and your
credit experiences, bill paying history, the number and type
of accounts you have, late payments, collection actions, outstanding
debt, bankruptcies, and the age of your accounts, collected
from your credit application and your credit report. Using
a statistical formula, creditors compare this information
to the performance of consumers with similar profiles. A credit
scoring system awards points for each factor. A total number
of points, know as a credit score, helps predict how creditworthy
you are, that is, how likely it is that you will repay a loan
and make the payments on time. Generally, consumers with good
credit risks have higher credit scores. The quality of your
credit rating can impact your ability to get credit, insurance
and employment. Having good credit means it will be easier
for you to get loans at lower interest rates. Lower interest
rates usually means lower monthly payments which saves you
money.
Do
you have bad or poor credit?
Do you want to improve your creditworthiness and credit rating?
Then you are on the right track and there are proven steps
you can take on your own to make this happen.
Now
for the bad news. Only time and effort, along with a personal
debt repayment plan will improve your credit report and rating.
The
good news is that you can do all of the things necessary to
improve your credit rating by yourself at little or no cost.
Step
1. Develop a personal budget.
Take
control of your financial situation by doing a realistic assessment
of how much money you take in and how much money you spend
each month. List your income from all sources. Then, list
your "fixed" expenses, those that are the same each
month, like mortgage payments or rent, car payments, and insurance
premiums. Next, list the expenses that may change or vary
from month to month like food, entertainment, recreation,
and clothing. Writing down all of your expenses, even those
that may seem insignificant, is a helpful way to get a grip
on and keep track of your spending patterns, identify necessary
expenses, and prioritize your expenditures. The main goal
is to make sure you can make ends meet on the basic living
necessities like housing, food, health care, insurance, and
education.
Step
2. Balance your checkbook.
Yes
it seems common sense to do this but you would be amazed at
how many people either don't know how to do it, or just hate
balancing their checkbook. If there is something on your bank
account statement that is confusing or you just can not get
quite right, then go see your banking representative for help.
Either way, it is absolutely critical to control your checkbook
or it will continue to control you.
Step
3. Create a plan to save money and pay down your debts.
You
might say ... hey, I can not pay all of my bills now, how
am I going to save any money? That is why getting your personal
budget under control is so critical. Cutting your monthly
expenditures for items that are not absolutely needed will
be necessary in order to get your budget under control. It
sounds simplistic, but your goal is to have more money coming
in each month, than the amount of money you spend each month.
Until you find a way to make this basic truth happen, you
will not be able to pay off your debts and become more credit
worthy in the eyes of lenders.
Not
quite sure how to accurately gather and itemize all of your
monthly expenditures and compare them to your monthly income?
You can find lots of helpful resources available online, at
your local library, or at bookstores that address money management
techniques, personal finance and budgeting.
Step
4. Pay your bills on time.
Goes
without saying but it is necessary in order to show lenders
that you are improving and are capable of making on time payments
each month. If you're having trouble making ends meet then
contact your creditors immediately. Tell them why it's difficult
for you, and try to work out a modified repayment plan that
reduces your payments to a more affordable level. Don't wait
until your accounts have been turned over to a debt collector.
At that point, your creditors have given up on you.
These
are some of the painful but necessary steps you must take
in order to improve your creditworthiness and rating in the
eyes of current and future lenders. So, embrace these steps
and make it work for your needs.
About
the Author:
James Smith publishes information on credit issues at http://www.credit-source-i.com/.
Visit the website for more information and resources. This
article may be freely reprinted as long as the author's information
and URL links remain intact.
• Debt Free Future is Possible
See
also:
• Health
Loans
•
Insurance
Settlements
• Personal
Loan Lender
• Four Steps to Creating Good Credit
• How Healthy Is Your Credit
Credit-Source-i.com
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