Free credit ratings are appealing because they give you a quick and simple answer about your
credit. And this quick simplicity was also the reason that car dealers and credit card issuers
first started using them. But now credit ratings have become even more important as their use
has spread to mortgage lenders, insurance companies and employers. So finding out where
your credit stands with free credit ratings has become a great help to everyday life.
Free credit ratings are created using the information from your credit report. Such things
as your bill-paying history, the number and types of accounts you have, your outstanding debt
and the average age of your accounts are used in rating your credit. Each item is given a number
of points as determined by its importance in predicting how well a borrower will repay a debt. And
the total of these points makes up your credit rating or score, and is the overall grade for your
credit.
In addition to being simple, free credit ratings also are designed to be unbiased. The
Equal Credit Opportunity Act prohibits the ratings from including personal factors such as
race, gender, marital status or nationality. Age may be considered as long as the elderly
aren't discriminated against.
To improve free credit ratings you need to improve the parts of your credit report that
are the weakest. Actions to consider are:
- Pay your bills on time and get current on any late accounts.
- If your debt is near your credit limits, pay down your highest balance accounts.
- When taking on new credit, look to diversify your types of credit. For instance, instead
of adding an additional credit card, you might take out an installment loan to make a purchase.
- The higher your average account age the better, so when closing out accounts, close the newer
ones first.
Another benefit to free credit ratings is that they can give you feedback on areas of your
credit you're trying to improve. If you ever have a credit application that's turned down
because of something in your credit report, you have the right to know the reason. You also
should find out the reason for any less favorable rates or terms. And once you know where
your credit is weak, you can work on improving it.
To get free credit ratings, your free credit report and free 30 days of credit monitoring,
please go to
free instant credit reports.
