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Your Free Credit Rating and How to Improve It
There is no absolute good or bad credit, your credit is only good or bad in comparison to
everyone else's. And when you get your free credit rating, you'll be able to tell just exactly
where your credit ranks. A credit rating, also called a credit score, grades various elements
in your credit report and combines them into a single number. And your free credit rating allows
you to see your credit report in the same way as a creditor.
Before credit ratings were in use, your credit was judged on the opinion of whoever checked
your application. This sometimes resulted in biased and prejudiced rejections of people who
shouldn't have been rejected. But the results that you get with your free credit rating are
unbiased. The rating is the product of a formula created with the information from hundreds of
thousands of credit reports. So the rating of your credit is based on statistics and not opinion.
The credit bureaus each use their own formula for creating their credit scores, but since they
usually use the same information, they produce similar results. If your free credit rating shows
that your credit could use some improvement, there are several areas to look at:
- Your record of paying your bills: Unpaid debts or late payments have a negative effect, with
recent accounts and large debts the most serious. And getting or keeping your accounts current is
the only way to improve your score for this.
- The size of your debt and how close you are to your credit limits: In general, the lower
your balances, the better your score. But if you pay down a high balance, don't take money
from an existing account or open a new account, as this will have an offsetting negative
effect.
- The age of you accounts, both individual and average: The longer you've shown you can
handle a given debt level the better your score. And as you increase your debt level, it will
take time to establish you capacity for that level. And when closing out accounts, it's better
to close out the more recent ones first.
- The opening of new accounts: New accounts not only lower the average of your accounts,
but opening several may also be a sign that you either are, or will be, overextended. To
reduce the negative impact on your free credit rating, spread out the opening of accounts.
- Your types of credit: Most people have a variety of credit and so you can improve your
score if you diversify the types of accounts you have.
To get your free credit rating, free credit report and free 30 days of credit monitoring,
please go to
free instant credit reports.
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