Your Credit Rating

One of your most important assets in this modern world is your credit rating. A good rating allows you to borrow money (even in tough times) to take advantage of opportunities or just to have when you need it.

It is important to recognize the main factors that affect your rating and to regularly check your credit report for errors, which are increasingly common. Here are some simple steps to help you raise your credit score:

Live within your means

Although it might sound pretty basic, you would be surprised how many people use debt to satisfy short-term desires. As a result, they rack up more debt than they can afford. Once the cycle starts, it becomes difficult to maintain a good credit rating. So when you are tempted to buy something you don't really need or can't afford, remember the words of Calvin Coolidge:

"There is no dignity quite so impressive, and no one independence quite so important, as living within your means."

Pay on Time

The most important consideration to a potential lender is whether or not you will pay your bills in full and on time. Schedule bill payments on your calendar or pay your bills as soon as you receive them. Remember that paying your bills comes before luxuries like going out to dinner or buying new clothes. When it comes to paying down debt, always start with the highest interest rate first. In other words, pay down your credit cards, and if there is money left over, pay down the next highest interest rate loan (personal loan or maybe a car loan). Only after all the high rate debts are paid should you consider paying off lower interest debt such as your mortgage.

Use a Variety of Credit

A variety of credit, such as mortgage loans and credit cards, can demonstrate that you are responsible for repaying both large and small financial promises. Make sure to use credit responsibly and don't run up credit card debt that you can't pay off immediately or within a few months.

Keep Accounts Open

It's never a good idea to open a credit card just to take advantage of a discount or a freebie and then immediately close it. The longer your credit history, the higher your credit rating tends to be.

Check your Rating

To determine the factors that affect your personal credit rating, check your credit report at least every six months. Several companies will do this for you. To find one, just use Google and choose the best one for your situation. Your credit rating will show you details such as accounts with past late payments, the various types of credit you've used, current balances, and recent requests for credit. If you find negative or erroneous information on your file, you can dispute it and have it removed. The longer these items stay on your credit file, the lower your credit score will become.

With good bill paying and credit habits, and by keeping an eye on your credit report, you can work to increase your credit rating. Raising your rating can help you obtain a car loan or mortgage and get a better rate on your loan and credit cards. The better your credit rating, the less the term "credit crunch" will apply to you.