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How to Tune Up and Transform Your Credit Rating

Whenever you apply for a loan your credit score rating is checked by the lender.How to improve your credit score

But that number doesn’t just dictate whether or not you get the loan, it is also responsible for how much interest you’ll pay. A difference of just a few points on a credit rating is enough to save you paying a significant amount of interest. A one hundred point difference can result in an interest rate difference of up to eight percent. If you have a bit of a chequered credit history you needn’t worry. There are some simple things you can do to improve your credit score rating.

What is a Credit Score Rating?

The most popular and oldest credit score rating is known as a FICO score, developed by the Fair Isaac Corporation. These days some of the credit bureaus have their own rating system, but they use similar formulas to the FICO system. Factors such as your total debt, number of accounts, account balances, and bill payment history are all formulated to give you a number. That number can range anywhere between 300 (the worst) to 850 (absolute best). Other systems use different number ranges, but in each system a low credit score rating number designates you a bad credit risk.

The Two Things That Affect Your Credit Score Rating the Most

The two things that affect your credit score rating the most are your bill payment history, and whether or not you have ever had an account go to collections. The longer your payment history the better. If you have a relatively short credit history, delinquent payments will have a greater affect on your credit score. Missing just one payment could seriously damage your credit score rating, lowering by one hundred points. Make sure you pay all of your bills on time, from rent payments to credit cards.




It is best to preserve a long credit history if you have one. Even if you have a credit card that you no longer use, keep it open and use it occasionally, paying the balance off right away. Closing an account actually damages your credit score. Making regular payments and keep your balance at 30% of your limit or less on open accounts you will actually raise your score over time.

Having an account referred to a collections agency is big trouble for your credit score. It doesn’t matter if it was a small bill and you paid it off quickly, the damage is done by the referral. It is considered a black mark on your credit history and will seriously damage your credit score rating.

Timing is Everything to Your Credit Score Rating

One of the least known ways of improving a credit score is to time when you apply for a loan or pay your bills. Credit card companies want to keep the credit scores of consumers low; this way they can charge more interest. How they do this is to calculate your score immediately before they bill you as that is the time when your balance is highest. The way to beat their system is to pay your bills off completely well before your due date. Then wait another 30 days (full billing cycle) before you make any more charges. Your balance will always be low when your report is submitted, and consequently your credit score rating will increase accordingly.

For better or worse, our lives are judged by how reliable a borrower we are. Our credit scores play a pivotal role in our financial and social health. Remember, banks and loan companies aren’t the only ones who use our credit score rating to form opinions of us; employers and landlords do as well. It’s wise to keep up a good credit rating, especially before judgment day!

Author’s Bio:

Ethel Wilson has been advising clients on how to improve their credit score ratings for over 12 years. With an extensive background in the banking, credit scores and financial industry, she now shares the best of her credit score information as a contributor and editor of