Credit Rating

If you’re unsure about your credit rating, I would recommend that you actually get it checked out by an official credit organisation. A good credit history has never been as important as it is today, especially when applying for a loan like a mortgage.

Instead of going through the lengthy process of applying for a mortgage, only to get turned down by the lender, I would find out before hand in what condition your credit rating is. There are various companies out there that will assess your credit rating and give you a comprehensive report.

To get a good credit rating, you need to build up good credit history. You may never have had bad credit rating in your life; however, that doesn’t necessarily mean you have a good credit rating.

Here are a few steps you can take to build a good credit history:

Pay your bills on time
This is probably the most important step you can take in order to build your history- make sure you pay your bills on time, all the time. Your credit rating can easily be tarnished by a single missed payment, so make sure you keep up to date. It’s easy to setup direct debits to pay off the monthly minimal balances, just to ensure that you don’t miss your payments.

Savings account
Savings accounts look good on your credit report because they signify stability. Opening savings accounts are one of the few things you can do at a young age to start building your financial history.

Credit cards
Credit cards are extremely good for building history, but as mentioned, only if you keep up with your payments. It’s important you don’t max out your credit card; it’s recommended that you keep your credit use to less than 30% of your credit limit for maximum credit points.

Different types of credit
A good way of building a strong credit rating is by getting different types of credits, including revolving accounts, such as credit cards and lines of credit, along with installment accounts, such as auto loans, personal loans and mortgages.

If you have a bad credit rating, your life is not over. It is possible to repair bad credit ratings, but it takes time and organization. Here are a few tips for those in the red-zone:

Here are a few steps you can take if you have bad credit rating:

Patience
If you’re in the red-zone, you have to be patient. Building up credit takes time even if you don’t have bad credit, so you have to be especially patient if you have bad credit.

Be organized
You must be organized. A lot of the times people have bad credit rating, not because they lack money, it’s because they aren’t organized- a few missed payments due to forgetfulness is all it takes.

Pay all your existing bills on time
You have bad credit rating, so it’s more important than ever that you keep on top of your bills by making all payments on time. Try to clear as much debt as possible as quickly as possible. But make sure you don’t go out of your way clearing one debt, only to fall short the following month on another debt- it’s better to stick to paying what you can afford in that situation. If you keep on top of things for a year or so, it will not go unnoticed.

Get rid of your credit cards
Try to reduce the amount of credit cards you have; try to stick with one card. Contact your creditors and cancel the cards you don’t need.

Secured Credit Card
You won’t be able to get a regular credit card, however, you will be applicable for a secured credit card, and that will help rebuild your credit. You will have to keep a certain amount of funds in your account that will be enough to cover your charges.

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