by : Richard Greenwood



Getting a good loan is getting increasingly tough as the banks tighten their lending criteria to survive the current credit crunch and subprime crisis. If your going to get the loan or insurance deals you want it is now more important than ever to keep your credit score in good shape.

If you have had enough of making late payments on credit card spending or meeting loan repayments, it is time to pull up your socks and do something about improving your credit score. The flip side of bad credit is that you can do something positive to improve your credit rating. With persistence, time and patience, you can bring up your credit rating by 50 to 100 points.

How do you go about doing this? One way to start to clean up your past record would be obtain your credit reports from the companies that provide the reports like Transunion, Equifax and Experian. These companies have different ways of allocating scores and have different items for assessment. Once you know the exact contents of your reports, you can plan a clean up operation to boost your credit rating.

Do you know that some companies don't provide accurate information in credit reports. You should carefully scrutinize these reports for factual errors and get them corrected with agency. You can avail yourself of prepaid legal services to help you sort out disputed items, if any. If your unable to do this then send a letter using certified mail to ensure the agency receives it. Under the law, these agencies have to respond to you within 30 days or remove the disputed item from the credit report.

If your credit rating is not currently good then make sure you avoid opening multiple new accounts within a short timeframe.

It is best to pay your bills on your time. Don't overspend on your credit cards and get into the revolving credit cycle. Limit your monthly spending on your credit card to a maximum of 25% of your credit limit. For example, if the bank provides you a credit limit of $30,000, it is better to keep your spending down to $5,000. Stick to a maximum of four credit cards. Anything more than this and you will find it unmanageable.

Many advocate moving credit card outstanding to cards that offer lower rates of interest. But this can actually hurt your credit rating. Shutting down your old accounts which have been paid off does not help. Closing old credit cards actually shorts the credit report and makes you look less-credit worthy.

Even if you have paid your dues in full, your credit report will be valid for a period of 7 years. Your credit score will improve but the past history will not change things wholesale. You need to build positive credit. One way is to use secured credit cards. The bank will require you to deposit with them a sum of money and you will be allowed a credit limit ranging from one and a half to 2 times your deposit. The transactions made on this card will show on your credit report but noone will know your credit card is secured.

Don't opt for the easy way out and declare yourself bankrupt. You'll pay the price heavily in the long term in the form of high interest rates and bad credit.

Improving your credit rating looks difficult but it can be done. It takes patience, application and perseverance.