Tips to Improve Your Credit Rating

Credit is simultaneously your greatest asset and biggest liability. Your credit rating, sometimes called your credit score, is an estimate made by credit bureaus calculating your financial worthiness based upon your financial and payment past. Your credit score usually dictates your interest rates for your credit card and any loan you ever apply for, so it's extremely important to monitor your rating and keep it high.

Before you can improve your credit rating,you have to find out what it is. The best way to receive a copy of your credit rating and your overall credit report is through a Letter to Request a Credit Report to one of the three credit bureaus, Equifax, Experian, and TransUnion. You are legally allowed one free credit report each year.

Once you have sent your credit report request and received your credit report, how do you improve your credit rating'

• Assess your debts: Consider who you owe money to and why. It isn't unusual to have many different loans and debts simultaneously such as student loans, auto loans, credit cards and a mortgage.
• Pay off your credit: This is the fastest way to better your score, and there are two ways to do it: lower the amount of credit you use per month, and pay off your credit cards. Pay off cards closest to reaching their credit limit first.
• Know your credit limit: Sometimes your credit score is lowered simply because of a misunderstanding about your line of credit.
• Use your old cards (sparingly) instead of closing those accounts: Closing an account will make it seem like you are closer to your credit limits and will not improve your score. The longer the history you've had with a card, especially if you've been paying off that card in full, the better your credit score will be.
• Pay attention to the basics: Pay your bills on time, use your credit card only when you need it, pay attention to your bank accounts, and keep track of your spending.

Breaking down your debt into manageable pieces will help you improve your credit score, which can ease your interest rates and bring you out of debt.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.