Credit Rating Strategies

You can't quickly remove accurate, negative information in your credit files, but you can work on a strategy to improve your credit rating. Credit-scoring models that determine a consumer's credit rating vary, but maintaining a low amount of credit-card debt and a good payment history can bolster your rating in any case.

Credit-Card Debt

Paying down a mortgage, auto loan or student loan will help decrease your overall debt load, but reducing credit-card debt will likely do more to increase your credit rating. Lenders tend to pay close attention to whether loan applicants are maxing out their credit-card limits. Applications are usually viewed more favorably if potential borrowers have low credit-card balances. Some financial professionals recommend using less than 30 percent of a credit limit. Therefore, you could increase your credit score by paying down credit cards that are close to their limits.

Closing Accounts

Some people assume they will bolster their credit rating by reducing the number of accounts they have. So they close old or unused credit accounts to increase their credit scores. This strategy can have the opposite effect because your credit score is impacted by the length of your credit history. The longer you've maintained credit accounts in good standing, the higher your credit score will be. Closing older accounts while leaving newer ones open could hamper your overall credit rating.

Payments

According to the Experian credit-reporting company, paying your bills on time is the most important thing you can do to maintain a good credit rating. Late payments documented on your credit report will hinder your credit score even if you don't owe a large amount of debt. Consider signing up for your creditors' automatic-payment services if you need help organizing your debts to get them paid on time. Many creditors allow their customers to have their payments automatically drawn out of their checking or savings accounts at a specified time each month.

Credit Errors

Your credit rating is based on what's in your credit files. Therefore, it's important to check your credit reports at the three nationwide credit-reporting agencies to ensure the information in them is accurate. For example, if you have higher credit limits on your accounts than your reports say you do, it could appear you're maxing out your available credit. Federal law allows consumers to request a free credit report one time per year from the following credit-reporting companies: Equifax, Experian and TransUnion.