How to Protect Your Credit Rating

When you want to obtain a mortgage or some other major loan, you will discover that, as a rule, creditors have certain minimum standards that every applicant must meet. For example, they may require a minimum annual income or reject those who have been through bankruptcy. Regardless of your financial situation, certain factors have a direct bearing on your credit rating and your success in having your loan application approved:

– You may be given a higher credit score if you have lived at your current address for two years or more, and you don’t want to use a post office box when you are filling out a loan application. Also, home owners generally receive a higher credit rating than renters because of the equity they have built up in their property.

– If a particular lender’s records indicate that people in a certain age group have a better bill-paying record than individuals in other age brackets, current law permits that lender to assign a higher credit score to the age category with the best payment history, and seniors are covered by the Equal Credit Opportunity Act as well.

– Possessing a bank card (Discover, MasterCard or Visa) that you have paid promptly over a given time period will improve your credit score because you met the bank’s requirements when you applied for it. Also, having checking and savings accounts will work in your favor when you are applying for credit. At the same time, any accounts written off by a creditor in the past as being uncollectible (known as “charge-offs”) and those that are turned over to a collection agency will be very damaging to your credit rating.

– Those who have a problem in obtaining credit because they are self-employed can contact the potential lender beforehand and find out what other information is needed for processing their application in order to improve the situation.

– Note that the Child Support Enforcement agency must let you know if it intends to report delinquencies in child support payments and tell you how you can dispute that claim. Also, if you have too many open accounts or are at or near your credit limit (using 70% or more), this can lower your credit rating as well.

– The Fair Credit Reporting Act ensures your right to dispute any item in your credit record that you feel is inaccurate or incomplete. If you see that a “closed” account is listed as being “open,” dispute that item by sending a certified letter to the credit bureau in question. You can also avoid this problem by asking that creditor to list your account as “closed by consumer” in their records whenever you take that step.

– If you cosign a loan for someone (which should always be done with caution) and that individual fails to make the required payments, protect your credit rating by making them yourself and have the cosigner reimburse you every month for doing so..

– Since you want to avoid the “too many inquiries” designation on your report, only apply for the credit that you genuinely want, and wait to hear the status of every application in turn before moving on to the next one.

– Any late payments (within the past six months to a year) will also be very damaging to your credit rating. Keep track of all due dates and make your payments on time, even when can only send the “minimum amount due” to your creditor.