The rating comes from the information in your credit report. This rating is used for many different purposes, so you would be wise to keep it as high as possible. Some things you have control over and some you don’t.
In essence this credit report rating, also called a FICO score, rates your likely ability to repay a loan. It may range from a bad rating of 300 to a great rating of 900. If your score is below 620, you may have trouble even getting a loan. A score above 700 is considered good.
You need to show a good credit history to improve your score. Pay your bills on time. This is the one area where you have the most control. If you have a problem, TALK with the lender. They may be able to work out a schedule that you both can live with, and it may not even be reported on your history. The worst thing that you can do is to ignore it! It will not go away or get better by itself. Lenders do not want to hurt your credit rating, they just want to know that they are going to get paid. You may actually be surprised at how helpful some of them can be.
Another way to improve your score is to keep your debt ratio low. That would be the percentage of your income owed in debt. Most people get into trouble with credit card debt. If you want to improve your credit rating, you have to have control of your credit cards. If you can’t, you may consider cutting them up.
In another article we showed the way to get a free credit report. Check it out here: Free Credit Report. Use the tips there to keep track of your credit history. You have the right to dispute items that show up on your report.
You would be very wise to keep your score as high as possible. Your credit report rating is used for many other things that we will discuss later.