Credit scores can be difficult to decipher. Nevertheless, improving a credit score can be relatively simple. People with poor rating may be unable to purchase a home or an automobile. In fact, a poor credit rating can prevent a person from obtaining employment. Due to the impact of ratings, people with credit should become educated about ways to improve their credit rating. The average person does not know how to calculate a credit score. Nevertheless, the average person can still recover from a few mishaps.

Pay Creditors On Time
Consumers should make every payment on time. Timely rent, auto, mortgage and utility payments are just as important as timely credit card payments. People who are unable to pay a utility bill in full should make a partial payment. Partial payments are considered more desirable than a completely missed payment. Credit cards with higher fees can be paid quickly by paying more than the required minimum payments, which typically cover only the credit card interest. Consistently late bill payments can be as detrimental to a score as non-payments. People who can only afford to make minimum payments should do so to avoid damaging their ratings.

Obtaining A Credit Report At No Cost
People who want to fix their credit should first obtain a credit report. The three major credit bureaus offer one free report to each consumer annually. If erroneous information is found on a report, the credit agency should be contacted to have the information corrected. It is important that consumers be persistent. The removal of poor marks from a credit report will help improve the associated FICO score.

Lowering The Debt Ratio
Consumers can lower their debt-to-credit ratio by increasing their available credit or by reducing their outstanding debt. Available credit can be increased by obtaining an additional credit card or by increasing current credit card limits. Nevertheless, the best way to lower the debt ratio is to eliminate debt. Sometimes, obtaining additional credit to lower a debt-to-credit ratio can actually work against the consumer.

Cash Only
Many people do not understand that using cash is the simplest way to protect a credit rating. By avoiding credit card and debit card use, one can avoid overspending. Once the cash is exhausted, spending stops, so overdraft fees are prevented.

Avoid Negative Bank Balances And Overdraft Fees
It is important to keep bank accounts active and in good standing. People who regularly incur negative balances and overdraft fees often have a poor rating. It is often best to rebound from a negative balance, pay off overdraft charges, disallow overdraft protection and make a firm decision to avoid overspending. Closing an account should be avoided. Ratings improve as bank accounts age.

Talk With Creditors
Consumers who are having financial challenges should approach their bills in a direct manner. Creditors should be contacted and made aware of the financial problems. Many creditors will be willing to adjust payment plans to help consumers pay off bills

Choose A Credit Union
People who are considering switching banking institutions should opt for a credit union. Unions have low interest rates to make future loans less expensive. In addition, they are non-profit.

Keep Credit Card Accounts Open
Closing the accounts of unused credit cards can actually damage a rating. FICO scores are calculated from the debt-to-credit ratio. Lowering the amount of available credit can lower the FICO score, and credit ranges can change drastically. A 650 FICO score is considered moderate, but a score of 550 is considered poor.

By using the above eight ways to improve credit rating, a consumer can increase their credit score. However, diligence and commitment may be required. An improved credit rating can improve financial health.

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