How to Boost & Improve Your Credit History Report Score/Rating

If you have ever applied for a loan, then you probably know how important your credit score can be.  Your credit rating score alone can make or break your chances of getting approved for a loan.

So since credit rating scores can be so important, you should learn these basic tips to improve your rating so you can increase your chances of getting approved for a loan (hopefully with a lower interest rate).

What is a Credit Rating Score?

A credit score (or credit history rating) is a score typically ranging from 300-800 that is calculated based on your credit history with lenders.

The exact number is usually calculated based on several factors such as: repayment history of previous loans, amount of current outstanding loans/debt, current use of available credit limits on credit cards, number of credit cards with balances, length of credit history, etc.

Your credit score rating will probably be reviewed if you apply for the following:

• Credit Card Loans

• Mortgage Application/Home Loan

• Automobile/Car Loan

• Refinance Loan

• Business Loan

What is a Good Credit Rating Score?

Typically if your credit score is above around 620, you are considered to have a "good" credit rating. Your score gets better and better when it gets closer to the 800 mark.  It is rare to have a perfect credit score, even if you have paid all of your debts in a timely manner.

Usually if your score is around 720 or higher, you are considered to have "great" or "excellent" credit.

This is very important because the higher your credit score rating is, the better your chances are of getting approved for a loan. Also, if you have a great credit score, you usually qualify for better loan terms & interest rates.

How to Fix or Improve Your Credit Score Rating

Know that you know that basics of how credit scores are calculated, you can begin to improve your credit score.  Simply follow these 10 tips & your credit score should begin to improve within a matter of weeks or months:

1. Try to pay off any previous outstanding debts you have that are unpaid or delinquent.  This can have a huge impact on your score.

2. Reduce the balance on your credit cards. Generally, it can hurt your credit score if a credit card has more than 50% of the balance used. (e.g. you have a $5,000 balance & you have $2,800 charged).

3. Avoid cancelling credit cards.  It is best to pay off the balance but keep the card open. This shows that you have a long standing credit relationship with the lender and improves your score.

4. If you don't yet have credit established, then you can establish a credit history by getting a co-signer to apply for a basic credit card or small loan amount. Then charge a few things (gas, etc.) and pay off the balance each month in full. If you are careful not to overspend, this is an excellent way to establish credit.

5. Pay your bills on time! This may be one of the absolute easiest things you can do.  By simply paying your bills when you are supposed to, is says to other lenders "this person will pay us back."  They will be more likely to approve you for that loan.

6. Don't buy more than you can afford.  If you buy more than you can afford by charging it to a loan or credit card, then you are only acquiring more debt.  Be more disciplined with your money & postpone those luxuries until you can afford them. This will reduce your overall debt & help keep your score high.

7. Check you credit report often.  You can get access to a free credit report annually, and many services are inexpensive or free that allow you to frequently check your credit report. This way, you can make sure there are not mistakes on your credit report.

8. Establish good relationships with creditors. A common myth is that if you have several credit cards, then it will hurt your credit rating. Actually, as long as you don't have balances on most of your cards, lenders will see this as you being disciplined & they will have greater confidence in your credit worthiness.

9. Settle past debts.  If you have collection agencies calling you, then work something out so that you can make payments to pay off your past debt.  This is improve your score dramatically if you take care of past debts.

10. Repeat steps 1-9!  These steps will ensure you keep a clean credit history, which will boost your credit rating dramatically. You can then enjoy easy loan approval, lower interest rates, and better loan terms!