If you are in need of credit and particularly if you are on a low credit rating - otherwise known as FICO in the United States, then there are some things that can help you and are worth knowing about. Credit ratings are based on a scale in the US - the lowest rating is 300 and the highest possible is 850.
If you fall into this category then sadly you will be "labeled" as a bad risk and chances are high that you will denied a loan or credit card if you apply for one.
If however, your score is higher than 620 then you will be perceived as a lower risk candidate and thus will be able to attain the loans and cards that you wish, within reason at least.
Fairly recently, the Consumer Federation of America undertook a study and found that if every credit-worthy person in the US were to bring their credit score up by as little as 30 points, then the amount of credit card bills paid annually would drop by a whopping 16 billion US dollars!
It would not be such a difficult exercise to bring your score up from say, 620 to 650, and thereby you will be going some way to really improving your credit rating just by doing this. To bring this up further though requires a bit more effort and a bit of knowledge too. Lets see how the credit ratings are worked out, shall we? The way your ratings are calculated are as follows...
# do you pay your credit cards or bills on time? This makes up 35% of your overall credit ratings. # how much do you owe on credit currently? This makes up a total of 30% of your rating. # how long is your credit history - generally this means the older you are the better your rating, although not entirely necessarily so. This adds up to 15% of your rating. # what type of credit you have been using - some types of credit use is rated higher or lower than others. Equates to 10% of your rate. # what sort of and how much credit have you recently applied for? Invariably affects your ratings to 10%.
Its pretty certain then that by focusing on the top two points you are going to go a long way in improving your rating. Make sure you pay your credit bills in good time, which also means you avoid any late payment fees. Keep your balance on your cards at a decent level - say around the 50% mark or below of your card allowance. The third point is out-with your control, obviously.
Its untrue that you need a perfect credit rating to get offered the best terms and conditions on a credit card.
And do remember that 720 is not so far off the 620 mark where you would perhaps struggle to even be offered some forms of credit, let alone be it on good terms. Try to plan ahead with your finances and keep within your own spending capabilities - only spend what you can afford to. This way you will be doing yourself and your credit rating a really decent favor indeed!
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There is more to learn about credit card help and a debt consolidation program to suit your needs.
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