In: Root » Legal and finance » Debt and credit
A credit rating estimates ability to repay debt. It is an evaluation made by credit bureaus of credit history. If you do not have a credit history it can be difficult to obtain a charge card or loan. Establishing a good credit history takes time. As it is important to establish good credit, it is equally or even more important to maintain a good rating. Your bank account history can be a vital component when a company considers lending to you for the first time. Another important factor lenders look at is your ability to hold a steady job. Along with employment history it pays to have a stable residence. Do you move often? Do you rent or own your home? Having utilities in your name can be helpful for first time borrowers. FICO scores are used by most lenders to determine your credit risk. FICO is the acronym for Fair Isaac Company (the company that created the FICO scores). You have separate FICO scores for each of the three major credit bureaus. These three major bureaus are Experian, TransUnion and Equifax. The scores are based upon information the bureaus keep on file about you. As the information changes, your FICO scores also change. The best first place to seek a credit card is the bank you do business with. If your bank account is in good standing, the existing relationship will be helpful. If this fails try applying for a department store card. These are sometimes easy to obtain. Another useful tool to establish credit history is a secured charge card. You secure the card by depositing an amount of money, $500 for example, and you obtain a card with a $500 limit. If you fail to make your payments the bank will take your deposit. Once you obtain your first card, be disciplined. Maintain good payment history so your FICO score can be built upon it. If you have established credit but your score is less than perfect there are things you can do to improve your rating. First: Stop using your credit cards! Put your cards away until you have control of your situation. Next: Obtain a copy of your credit report. Find out which accounts you need to work on. If your report contains incorrect information it is your right to have it removed. Get current on any delinquent accounts. Payment history makes up a big portion of your FICO score. Avoid applying for more charge cards and loans while you are trying to improve your score. Do not close accounts. This can have a negative affect on your credit rating. Talk to your creditors. Many times they have hardship programs that can reduce your monthly payments. Work to pay off your debts. If you are overwhelmed seek professional assistance. Locate a credit counselor. And Finally: Be patient. It will take time to repair your credit. For more information visit http://www.cardtohave.com/credit-card-ratings.html.
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