Improve and Maintain Your Credit Rating Top 10 Ways 1. Don’t get new credit cards simply to increase your amount of available credit 2. Keep on top of your credit rating by checking it often – it has been estimated that over 60% of credit reports contain errors. It is your responsibility to ensure that it is current and accurate. Obviously a less than stellar credit rating can seriously affect your interest rate and even your ability to get a mortgage at all! 3. If you are having difficulty keeping up with bills due to a temporary setback such as illness or reduction of income ensure you do not ignore your creditors. Your bills will not go away and your credit will go into a tailspin in short order. Be proactive and contact them before they contact you. Most companies can understand that circumstances sometimes go against you and will work with you to keep your credit rating in good standing. 4. If your credit is very poor or you have a short credit history, open up some new accounts and be certain to pay your bills on time. One or two bad accounts out of many will look more favorable than having just a couple of creditors – all of them with bad histories. For those who have no history, a bank will often be able to provide you with either a secured credit card or bank loan. If you pay your loan or credit card balance off regularly and on time, you may well qualify for an unsecured loan upon completing term of the secured one. 5. Realize that accounts with a balance of over 60 days get reflected on your credit report. If you are forced to miss a payment one month, ensure that you make it the next.

6. If you are running into financial difficulties, you may write a letter to the credit reporting agencies explaining the situation and they will add it to your file. This will help you down the road when applying for credit as late or missed payments for just cause are certainly seen in a more favorable light than unexplained delinquency.

7. After checking your credit report and finding there are outstanding balances, call the creditor or their representative and make arrangements for payment. This can often be done for pennies on the dollar if a collection agency is involved. Ensure that whomever you are dealing with guarantees in writing that your debt will be considered paid upon your completion of payment on your arrangement. When you make your final payment, demand a letter be sent to the credit agency absolving you of your delinquency and ask for a copy of that letter personally.

8. Do not get cash advances on your credit cards. Though these are provided as a “convenience” by the major credit card companies, you will soon discover they are not very convenient at all when they negatively affect your credit rating.

9. Never use one source of credit to pay another! This strategy, employed by thousands, has been the source of thousands of bankruptcies. Just don’t do it!

10. If you can pay cash for an item – do it! Getting some incentive from paying on a credit card, be it air miles or points or what have you, doesn’t help you when you are applying for a mortgage or a loan. All it does is increase your debt to income ratio and consequently decrease your desirability in the eyes of the lender. If you want to take advantage of incentives that the credit card companies provide, only do so to the extent that you will be able to pay the balance on in full at the end of the month.