• Boosting Your Credit Score To Get The Best Credit Card Deal


    Making Your Credit Rating Work For You

    It can be a stressful time applying for a new line of credit. Many consumers get upset when applying for a new credit card when they find out their credit score is low, and they have poor credit.

    A lower credit score can impact the amount of money that financial institutions will lend you. It can also impact on the rate of interest at which you borrow. In some cases, the difference between having an excellent credit rating and a poor one could be getting a 0% deal on your credit card, and paying an APR that touches 30%. Sometimes financial institutions won't even lend you a dime, based on a low credit score.

    A variety of factors can impact on your credit score. Generally speaking, lenders love stability more than anything else. Paying amounts owed on time is but one of many variables. It could be that you've lived in more than one address over the preceding three years; or having borrowings with a variety of institutions. It could even be down to the fact that you've got too much credit already at your disposal.

    But just what goes into your credit score? A report by the analytics experts Fair Issac recently broke credit scoring down into five categories and assessed their importance on the final rating.

    Most important was how you had paid you bills in the past with the most emphasis on recent activity. Naturally, paying all your bills on time is good; paying them consistently late is bad. Having accounts that were sent to collection agencies is even worse, though nowhere near as bad as declaring bankruptcy. Paying your bills in a timely and consistent manner contributed to 35 percent of the score.

    Also impacting on credit scores is the length of credit history (15 percent). The longer a customer has had credit - particularly if it's with the same financial institution - the more points they get.

    The mix of credit contributes 10 percent to the credit score. Customers with the best scores have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans. Statistically, consumers with a richer variety of experiences are better credit risks. As far as banks and credit card companies are concerned, they know how to handle money.

    The last important factor taken into consideration is new credit applications (10 percent). If you've applied for several lines of credit in the past few months this will negatively impact your credit score.

    The antidotes to this are simple. Pay your bills in a timely manner, particularly in the months leading up to an application. Close unused retail store cards, credit cards and old bank accounts with overdraft facilities. Maintain long-standing and healthy arrangements with banks and other lenders. Don't apply for a stack of credit cards, loans and so on, unless you're absolutely sure it's the right product for you. It goes without saying that you shouldn't apply for a credit line unless you use it.

    There's a sixth factor that can contribute enormously to a negative credit rating. In 2001 it became possible for customers to get their own credit score in exchange for a small fee. In the past, prospective lenders were able to keep this score hidden, and many unscrupulous institutions used this knowledge to charge a higher APR on credit. By being aware of your credit score lenders can't lie and say your score was low and charge higher APR on your credit card.

    More importantly, it's vital that you get rid of black marks on your credit rating. Errors unfortunately happen all the time, and erroneous reports of missed payments, referrals to debt collectors and even bankruptcies can scupper your chances of getting a low rate of interest and even a credit card altogether. Query everything and haggle with credit reference agencies so that only the information that is listed on your credit history that should be there, is there.

    You can find out your credit history by applying to one of several companies. Many offer an online service and can furnish you with the information both quickly and cheaply. Equifax, Truecredit and Consumerinfo are some of the best such providers.

    Patience is the key to getting a great credit score - and the best credit deals. You're never going to make the jump from having a credit score of 500 to one of 700 overnight, but by implementing easy to follow and practical strategies, you can quite easily leverage your credit score to a rating that is respected by all concerned.


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