How To Improve Your Credit Score

If you want to get a loan, whether it's for a car, a house or something else, you need to have a good credit rating. A good credit rating can even enable you to get more favorable terms on the loan such as lower interest rates. There are actually 2 ratings, the FICO score and the VantageScore.

You can get your scores for both of these online for free. The FICO ranges from 300 to 850 and the VantageScore ranges from 501-990 (the higher the better). A FICO score in the mid 700s or higher is considered good.

The first thing you can do to improve your credit rating is to pay your bills on time. It's especially important not to let a bill get to the collection stage.

The next thing you can do is to keep your revolving credit low. That means you should either pay your credit card bills off each month, or keep a very low balance.

Don't have more credit card or lending accounts than necessary, and don't open several in short time frame. This will harm your score even more if you don't have a long credit history. You'll be seen as high risk.

If you don't have a credit card, you'll need to get one and use it regularly to establish your credit score. Just avoid opening more than 2 or 3 accounts, and use every card you have regularly.

It's also important to look for new loans over a focussed period of time. The credit rating agencies actually look at the length of time over which your credit inquiries are made.

If you follow these rules, you should be able to improve your credit score over time.