With the current credit crunch, you may have over-utilized your credit cards. This can ultimately have a negative effect on your credit rating.
Here are five tips to improve your credit rating:
1. While credit reports can be obtained for free on an annual basis, you do have to pay a fee to view your credit scores at other times. Therefore, go to annualcreditreport.com which is the only site available for free credit reports. After you have printed out your credit reports, check to determine if there is any suspicious activity or anything on the report you do not recognize or wish to dispute.
2. In order to obtain your FICO score, you can check out myfico.com. Here you will receive the scores from all three credit agencies (Experian, Trans American, and Equifax). In addition, this site details the current interest rates for home mortgages and car loans based on your FICO score.
3. Pay down your credit card debt. High interest rate credit cards should be paid off first. Add additional money to the minimum payment to facilitate the reduction of the debt. Pay credit card bills on time.
4. During this economic crisis, you may find that using credit to pay for items you need is more than tempting. The problem is that if you max out your cards, this can not only cause financial difficulties but can lower your FICO score as well. The general rule is not to spend more than 30% of your total credit limit.
5. While consolidating credit cards may save money on interest payments, it does not bode well for the credit agencies. So if you have two or more credit cards, it is recommended that you avoid applying for additional credit. Both these actions can reduce your FICO score.
In these difficult times, some of you may have to make a mortgage payment, pay for expensive medication or utilize the credit card for an expense that, under normal conditions, you would pay with cash or check. Perhaps this is a one-time occurrence. If this is the case, try to pay off that specific charge immediately.
With the current bank lending freeze, it may be some time before you can secure a loan. Even if you could find a bank willing to give you a loan, your FICO score will have to be much higher than before.
Check your credit card reports and FICO scores and if you find low scores, it’s time to take action now so that if you need a loan in the near future, you will be in a better financial position to obtain one.
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Nice tips. Most of them make sense. It’ll be good for users who are in debt. I have been taking advices from bills for a while now and learnt everything pretty much on my own. Bills.com has online resources which help people learn and take appropriate steps.