How to improve your credit rating

* Maintain a good payment record – It is very important to pay your bills on time. A lot of late payments can lower a credit history record.

* Control of debt – Lenders want to see that you are not living beyond your means. Experts estimate that non-mortgage credit payments each month should not exceed more than 15 percent of your after tax income.

* Signs of responsibility and stability – Lenders perceive things such as longevity in your home and job (at least two years) as signs of stability. Having a respected profession can improve a credit rating.

* Credit inquiries – An inquiry is a notation on your credit history file. There are several kinds of notations that may or may not have an adverse effect on your credit score. Soft pulls don’t affect your credit score and are characteristic of the following examples:

A credit bureau may sell your contact information to an advertiser purchasing a list of people with similar characteristics, like homeowners with excellent credit. A creditor can check your credit periodically and so note your file will no adverse effect to your credit history. Or, a credit counseling agency, with your permission, can pull your credit report with no adverse action. Each of the preceeding examples are commonly referred to as a “soft” credit pull.

However “hard” credit inquiries are made by lenders. Lenders, when granted a permissible purpose by you for the purposes of extending you credit, can check your credit history. Hard inquiries from lenders directly affect your credit score. Keeping credit inquiries to a minimum can help your credit rating. A lender may perceive many inquiries on your report as a signal that you are looking for loans and will possibly consider you a poor credit risk. To keep your credit rating good, try not to let companies access your history unnecessarily.

* Keep cards you don’t use – Although it is believed that having too many credit cards can have an adverse affect on your credit score, closing lines of credit can not improve your score and may even hurt it. The credit rating formula looks at the difference between the amount of credit you have and the amount you’re using, so reducing your total credit can make the balance you carry seem larger and take points off your score.

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