How to Increase Credit Rating

Before a lender grants credit or loan money, the lender must access credit records. By reviewing a credit report, lenders can determine the probability that the loan or line of credit will be repaid in full. The better the credit score, the more likely you are to get approved for the credit and loans applied for. Your credit also can make a difference when applying for other such necessities as employment or renting an apartment. Improving your credit rating can save money in interest and ensure that no lender, employer or apartment manager turns down your applications.

Instructions

1

Pay down as much credit card debt as possible. According to CNN Money, the amount charged on credit cards can hurt a credit rating---even if payments are made on time. Carrying a high balance gives a high "debt utilization" that, in turn, results in lower credit scores.

2

Ask for a credit limit increase on credit cards. If you can't afford to pay down credit cards, yet have a history of on-time payments, the credit card issuer may be willing to raise the credit limit. A higher credit limit reduces debt utilization and increases credit scores.

3

Dispute any collection accounts or negative entries on a credit report that you don't recognize. The Federal Trade Commission recommends that all individuals regularly review their credit reports for errors. Should you find an error, notify the credit bureaus and request a full investigation. If the creditor reporting the data cannot verify it, the negative information must be removed from your credit file---increasing credit score. (See References 2.)

4

Write goodwill letters to each creditor reporting late payments to the credit bureaus. Late payments not only have a significant negative impact on credit scores, a history of late payments shows future lenders that you cannot be trusted to properly manage debts. (See References 3.) Write a letter to each creditor reporting the late payments and request that the notations be removed. Cite any positive aspects of the account, such as the fact that you've been a customer for five years or that you usually make on-time payments, when making the request.

5

Pay creditors on time. Making timely payments boosts credit scores and shows any company or individual reviewing your credit report that you possess good debt management skills and are an excellent lending risk.