How to Obtain a Good Credit Rating

Credit scores range from 375 to 900 points. According to the U.S. Department of Commerce, a score of 680 or higher is considered a good, or "A," credit rating. Maintaining a high score makes it easier for you to qualify for credit, such as mortgages, auto financing and credit cards. You also qualify for lower interest rates on these loans when your rating is good. Even if your credit rating is currently lower than you would like, you can take steps to obtain a higher score.

Instructions

1

Obtain copies of your credit reports from each of the three consumer reporting companies, which are Equifax, Experian and TransUnion. This enables you to look for and dispute any errors as well as take care of any outstanding debt of which you were unaware. You are entitled to a free report from each company once a year. You can begin this process online by visiting AnnualCreditReport.com.

2

Pay your bills on time all the time. According to the Consumer Federation of America, your payment history makes up over one-third of your credit rating. While paying off your debts is important, it is better to make the minimum monthly payment on time than to pay extra yet be late.

3

Keep your credit usage well below your available credit. Avoid maxing out your credit cards and installment loan accounts. The closer your debts are to your credit limits, the lower your credit rating will become. If you continually carry high balances, work to pay them down.

4

Minimize the amount of different credit balances you keep open. While it is favorable to have a variety of credit types, too many credit cards or loans will mar your rating. Get rid of excessive accounts by paying even a little extra each month on one bill. When that account is paid in full, close it and take the monthly amount you were paying on it and send it to another creditor.

5

Build up your credit over time. The length of your credit history accounts for 15 percent of your credit score. Following good credit practices over time will improve your rating. In addition, too much new credit lowers your score, so wait before you apply for a new credit card or other nonessential line of credit.