How to Get a Good Credit Rating or Score

Improving your credit score and rating could save you thousands of dollars in finance charges over a lifetime. With low credit scores and ratings, you'll pay more for everything you buy on credit, including automobiles, houses and even vacations. Paying your bills on time each and every month will create a solid foundation for raising your credit score and help you become eligible for the lowest available interest rates.

Instructions

1

Get a copy of your credit report and score. You can get a free copy of your credit report from AnnualCreditReport.com, a website established by the nationwide credit bureaus to provide free reports under the Fair Credit Reporting Act. You will get an opportunity to purchase your credit score separately by following instructions on the report. You're entitled to one free report from each of the rating agencies in every 12-month period. Ordering one every four months will allow you to monitor your report year-round as you improve your credit rating.

2

Resolve any old debts still showing on your credit report by making payments. Address all other negative entries such as charge-offs, liens and judgments. Also write letters to the credit bureaus disputing any information that is inaccurate. Paying off delinquent debts and fixing errors could give your credit score a boost.

3

Keep balances low on all of your credit cards. Experian, one of three nationwide credit bureaus, posted a chart on its website in September 2010 showing that the average American credit card holder was using only 22 percent of her available credit. That means to stay withing the national average you should carry a balance of no more than about $220 on a credit card with a $1,000 credit limit. Keeping your balances low will show that you are using your credit responsibly and lead to a better credit score, according to Experian.

4

Apply for credit only when you need it. The Experian chart indicated that most people, on average, apply for credit only twice a year. That means you should avoid filling out multiple credit applications unless you are shopping for a mortgage or auto loan and you are seeking the best rate. Experian says the FICO credit scoring system will treat such applications as a single inquiry on your credit if you apply for the loans within about 30 days. Keeping your credit inquires to a minimum will also help boost your credit score.