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Improve My Credit Rating

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Unfortunately for many people, it is all to easy to cause damage to your credit rating either through financial misfortune such as losing your job, or perhaps more commonly, by building up debts in the naivety of youth which then become difficult if not impossible to repay in a timely manner.

Missing payments on loans or credit cards will leave a black mark on your credit file, thus lowering your credit rating, and defaulting on finance altogether will have an even worse effect.

If you find yourself with a poor credit rating, you may be tempted by the advertisements you'll no doubt have seen plastered across the web which promise to rebuild your credit rating and solve all your credit problems at a stroke. Does this maybe sound too good to be true?

Many of these schemes are at best dubious and unlikely to achieve the promised results, while others are at worst outright illegal as they advocate the use of fraudulent techniques to leave your old credit persona behind. So is there anything you can actually do to improve a damaged credit rating?

The first thing to do is to obtain a copy of your credit file from one of the major credit reference agencies. There will be a small fee for this, but you have the legal right to see all the data which is held on it. Check it over carefully to see if there are any small outstanding debts which you've overlooked, and can be repaid without too much difficulty, removing these default notices from your file.

Also ensure that all the information on your file is correct and complete, paying special attention to any debts marked outstanding which you think you might, in fact, have cleared - it's far from unknown for a cleared debt not to be accurately reflected on your file, leaving your credit score worse than it really should be.

If you find any such errors, and can prove that a mistake has been made, the credit reference agencies must by law correct the information.

Now that you've cleared any overlooked debts and made sure that your file is up to date and correct, you need to start to take active measures to improve your rating. It is unfortunately impossible to remove genuinely adverse information from your file until it expires naturally, which can take up to seven years depending on the nature of the offence.

What you can do, however, is to add 'good' information to balance the 'bad'. The most effective way to do this is to take out a form of financial service which you are almost certain to be accepted for - a high APR credit card specifically aimed at people with poor credit is a good example. A no-frills bank account which allows no possibility of going into debt is another.

The trick is to make sure that this new product you take out reports your activity to the credit reference agencies. Thus, by operating the account responsibly and not missing any repayments or otherwise getting into trouble again, you will slowly begin to build up the number of positives in your file.

It's by no means a magic bullet and it requires time and patience, but slowly your credit score will begin to improve to the extent that you can consider applying for a more advanced form of credit, and steadily work your way back towards a neutral or even good credit rating.

Improve My Credit Rating

The number of folks getting seriously into debt is therefore rising, and the number of folks with a good to excellent credit rating is shrinking. The reasons that people get into debt are numerous and aren't simply because a person loses their job, or because something unexpected occurred.

People also get into debt because they live beyond their means, they over rely on credit cards, or in the case of many baby boomers they simply feel that tomorrow might never come, so they just live for today.

In the case of mounting debts however, tomorrow does come, and it comes in the form of worsening credit ratings, unwelcome knocks on the door, and often bankruptcy.

The United States is now paying the cost of living on borrowed money, but many of its politicians surprisingly believe that creating more debts is the way to get out of debt, and they ignore the vast majority of Americans that are cautioning them.

Getting a secured loan is easy, but risky. You simply sign to say that if you default on the loan, that the lender gets the rights to something that you own, and that something is generally worth more than what you borrowed.

If your collateral is worth less than the amount that you want to borrow, then you'll most likely pay a higher rate of interest.

The banks made a big blunder with recent real estate of course, because they offered 95-100% loans, believing without any good reason, that house prices just had to keep going up, which of course they couldn't and didn't.

So Why Are So Many People Now Applying For Unsecured Loans?

The first and simplest answer is because a growing number of people no longer have anything to offer as collateral, and if they do have something, then they don't want to use it, because they're worried about losing their jobs, or about their spouses losing their jobs, about sickness, getting their working hours shortened, and any number of other very good reasons.

What Are People Using Their Unsecured Loans For?

Many people are now taking out unsecured loans to pay for education, and I don't mean their children's education, which might also be a good reason. They're taking out unsecured loans so that they can get retrained and get a better job than the one that they presently have, or had.

They are also being used for debt consolidation, repairs to property or an automobile, to pay for medical bills; and some fortunate people are using them just so that they can take a vacation.

Can Just About Anyone Get An Unsecured Loan?

Almost every bank will lend to somebody that has a reasonably good credit rating, but not every lender will loan to someone who has bad credit. If your credit is bad then the good news is that, the growing number of people whose credit recently got spoiled for one reason or another, means that there is also a growing number of lenders to meet the need.

It would be nice to say that the banks that make unsecured loans to people with bad credit are run by altruistic people with hearts of gold, but they're not.

It should be said however, that those who lend to people with bad credit are often more willing to check and see if the would-be borrower once had good credit, and they're more likely to understand that something simply went wrong in his or her life. They'll more than likely check what you want the money for, and if they think the reason is a good one, then there's a very good chance that you'll receive the loan at a lower interest rate.

It is of course possible to get a no questions asked, no collateral, bad credit loan, but the interest will be very high, and you should only take one out if you have no other choice. If you have no other choice, then make sure that you'll be able to pay it back on time, because if you don't then you'll be jumping right out of the proverbial frying pan and into the fire.

Whichever type of loan you finally decide to apply for, you can be certain that if you pay it back on time, that it will increase your credit score. If you repay a secured loan, then you'll get a few additional points added; if you pay off an unsecured loan then you'll get more points added; and if you pay off a bad credit, unsecured loan on time, then not only will it help your credit rating in a big way, but if you ever need another loan it will be whole lot easier to get, and the interest will be lower.

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Both Martin Sumner & Michael Redbourn are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Martin Sumner has sinced written about articles on various topics from Marriage, Payday Loans and Debts Loans. Martin writes for ADM Online, who offer , both

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is the best-selling author and co-author of eight books, including Do I Have To Give Up Me To Be Loved By You?, Do I Have To Give Up Me To Be Loved By My Kids?, Healing Your Aloneness ,Inner B...