7 Ways to Ensure a Great Credit Rating

Ways to ensure a great credit rating

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Whether you’re preparing to buy a new home or you’re just simply interested in keeping your credit score as high as possible, there are plenty of steps you can take to ensure that you have the best possible credit rating. Remember, a good credit score is worth working for, since your credit score can affect your ability to take out a loan, get a lease, or even get the job or promotion you’re vying for.

So if you’re ready to take the necessary steps to ensure that you have a good one, here are seven ways to ensure a great credit rating.

Ways to ensure a great credit rating #1

Check your credit report

One of the major things you can do to keep your credit rating high is to ensure that there aren’t any errors or fraudulent accounts on your credit report. And you can do that by pulling your credit report regularly. In Canada, you can request a copy of your credit report free by mail.

Ways to ensure a great credit rating #2

Rectify errors quickly

If you do find an error on your credit report, whether it be something minor like an address that hasn’t been updated or something major like a fraudulent account, report it as quickly as possible. You can report problems online or by letter, but either way, make sure your correspondence with the reporting agency is very detailed.

If you’re having trouble with a fraudulent account, you’ll also have to contact the creditor to fix the issue.

Ways to ensure a great credit rating #3

Pay your bills on time

The single most important part of your credit rating is paying your bills on time. Potential lenders and landlords care that you are able to pay your bills on time more than they care about anything else. So if you’re in the habit of being late with your bills – start getting in the habit of paying your bills early.

Do what you need to do to make this happen on a regular basis, whether it means setting up automatic payments, cutting back on spending so you have money to pay bills on time, or moving due dates around so that you can more easily pay on time.

Ways to ensure a great credit rating #4

Don’t carry a balance

The second most important thing to potential lenders is that you don’t have more debt than you can handle. Credit reporting companies look at how much debt you have compared with how much credit has been extended to you. If you have available credit from credit card companies totaling $15,000 and you are carrying balances totaling $10,000, that’s not going to be good for your credit score.

Bring your balance down to $5,000, and you could see a huge improvement right away. The best option, though, is to not make a habit of carrying balances at all. Use low interest rate credit cards for a few everyday purchases, and pay them off each month. This way, you keep the balance low, show you can use credit responsibly, and avoid costly interest charges.

Ways to ensure a great credit rating #5

Leave old accounts open

The age of your credit is another important factor in your credit rating. The longer you’ve had credit of any sort, be it a school loan, credit card, mortgage, or whatever, the better that will be for your credit score.

So even if you pay off a credit card that you’ve had for a few years, don’t shut down the account completely, especially if it’s the oldest account on your record. Instead, leave it open as long as you don’t have to pay high fees for the card each year, as it will help boost your credit score.

Ways to ensure a great credit rating #6

Don’t apply for credit too often

When you’re constantly applying for credit, potential lenders may think you’re likely to get in over your head credit-wise, leaving you less able to pay any debts you rack up with them. That’s why over-applying for credit can be harmful to your credit score. The trick
when you’re shopping for loans for a car or home is to apply for several loans within a week.

Because smart consumers shop around for loans, and thus have their credit reports examined often, credit reporting bureaus will only count a week’s worth of credit shopping as one inquiry on your report, keeping your score from getting dinged too much.

Ways to ensure a great credit rating #7

Don’t take out new credit just before applying for a major loan

One final way to ensure that you have a good credit rating, especially if you’re getting ready to make a big purchase, is to avoid taking out new credit just before applying for a loan or during the process of getting approved for a major loan, such as a mortgage.

Buying a car a few months before you buy a new home is fine, but buying a car just before you close on a new home, even if you’ll still have plenty of money to cover your mortgage payments, is not a great idea.

If you’re ready to buy or sell a home, visit ComFree.com.

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