Many of us have maximized our credit cards, but we think it’s time to maximize our credit rating instead!
This guide will show you the 5 best ways to improve your credit rating.
1. Remove your credit rating
Did you know that there are two ways to withdraw your credit rating? Depending on the type of credit application you use, you could hurt your credit.
Withdrawing your credit rating when you apply for a loan can hurt your rating. This is known as complete credit investigation.
On the other hand, if you withdraw your credit rating for reasons other than obtaining a loan, or if you use a credit monitoring service, then you apply what is called a credit overview, this which will not affect your rating.
You should not have more than 2 firm credit applications over a 2 year period. This type of survey takes 2 years to be removed from your report and you can start to lose points on your credit rating after 3 requests within 2 years.
2. Make sure you have at least one major credit card
Having a credit card is a great way to build a credit history and increase your credit rating. You can use it every month; make sure you respect your payment deadlines!
If you do not have a credit history, it’s still easy to get a credit card. Most credit companies have programs for individuals in these situations (for example immigrants or students). You might not be granted a large amount of credit right off the bat, but it’s still a great way to start forming your credit rating.
If you currently have a bad credit rating and do not qualify for a credit card, we recommend applying for a secured credit card. A secured credit card works just like a regular credit card with one exception: you must leave a deposit before you are granted a secured credit card.
The types of credit accounts can have an effect on your credit rating, depending on their nature. Real estate loans are the most important and have the greatest impact on your credit, followed by installment loans (such as auto loans, student loans, furniture loans and so on), credit cards as well as retail cards.
Your credit rating will be better off if you are contributing for a home loan or an installment loan than if you are trying to rebuild it using retail cards or credit cards only.
4. Keep old accounts open
The longevity of your credit represents 15% of your credit rating, which is a sizeable amount. If you keep your old accounts open, they will continue to build a credit history, and this is certainly a good way to go.
If your old account has a late payment or something similar, you should still keep it open because anyway, you can not escape your debt. By keeping it open, you will at least have some benefits like contributing to your credit history and possibly improving the credit rating for the future.
5. Stay informed!
Do you know all the factors that make up a credit rating? Here they are:
– Payment history
– Types of credit
– New credit
– Longevity of credit
Read more about what forms a credit rating. By staying informed, decisions about your loans and credit in the future can be made in a more informed way, which will greatly benefit your credit rating.