What Can I Do to Increase My Credit Rating?

You can do plenty to increase your credit rating and qualify for financing. Credit ratings or scores fall within the 300 to 850 range, with higher scores indicating that a consumer is more creditworthy. Building a better rating and keeping a high rating includes following specific guidelines that ensure credit health.

Due Dates

Watch due dates on credit accounts and loans closely and always submit your payments before this date. Missing a due date or sending in a payment late can harm your credit rating and make it difficult to qualify for new financing. Creditors tend to report accounts that are 30 days past due, but even if you pay within this 30-day window, late payments result in additional fees and possible interest rate increases.

Account Balances

Another factor affecting your credit rating is the amount of debt you carry on credit cards. Credit cards help build a good rating because your rating is based on how well you manage credit. Using credit and then paying off debts helps you achieve a better rating. But leaving high charges on your card from month to month, keeping balances close to the limit and maxing out your credit cards will lower your personal credit rating. Aim to keep your credit card balances below 30 percent of the card's limit.

Include Additional Accounts

The types of accounts in your name also impacts credit scoring, and having only one credit account isn't typically enough to increase credit ratings. Credit scores factor in diversification, and opening another type of account can help increase your rating. Consider a credit mixture that includes a credit card, an auto loan and perhaps a mortgage loan.

Credit Reports

Dispute creditors' errors on your credit report to help add a few points to your personal rating. Any negative item on your report affects your credit score. But removing negative items reported in error can help you efforts to increase your personal score. Get your report from Annual Credit Report, and then ask creditors to investigate mistakes made on their part. Report unfamiliar accounts or suspicious activity to the credit bureaus.

Work with Creditors

Develop an amicable relationship with creditors to help limit negative items reported to the credit bureaus. For example, if you can't make a payment for one or more months, rather than skip and stop communication with creditors, alert them to your situation to see if they can recommend a solution. Creditors may reduce the amount due on the account or propose a skip payment option for a few months.