A Way Out Of Poor Credit Rating

2007-03-08 10:33:40

( Financial )



In the financial community, you always read and hear about credit scores. Your credit score is very important. It will affect your applications for major financial products like mortgage, credit cards, car loans or even short term cash loans. If you have a poor credit rating, you have to make an effort to make it better. Remember that a poor credit rating will end up costing you more in the future.

To fully understand how you got your poor credit rating, you must understand how it is calculated. The types of credit that you currently use play a role in how your score is calculated. They check how many credit cards, installment loans, mortgages and car loans are active to date. If you have a short credit history, it is important that you have more than one type of credit.

A big factor is your payment history. Almost everything is checked to calculate your credit rating. This includes your payment history for mortgages, credit cards, store cards, car loans and other installment loans even if was just for furniture. They also check if you have declared bankruptcy. They have a record of your late payments. They even know how late your payment was.

They also know how much you owe. They check how much you owe your credit card companies, your outstanding balance in your car loan and your mortgage. The bigger available credit amount on your credit card, the more positive the impact to your score.

If you have a poor credit rating, you may want to order a copy of your credit report. Check for erroneous or outdated data. Opening credit accounts you do have no intention of doing is a bad idea. If you have a short credit history, opening a few credit accounts and paying them all off on time would be a good start. Remember that negative items impact your score more than the positive.


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