Six steps for improving your credit rating

Having a bad or insufficient credit history will have its impact on your life. But fortunately that is something you can either correct or prevent from happening. It's never too late to become credit worthy, just get started, and remember that it will not happen overnight.
Here are 6 steps for improving your credit rating:

1. Pay your bills on time. This is always a good practice, and it is especially critical that you make prompt payments close to the time you need a loan. That is because a late or missed payment in the last few months is likely to lower your score much more than an isolated late payment five years ago.

2. Order your credit reports. Find out what kind of information ACRA Credit Bureau stores about you.
If you have been denied credit, insurance or employment because of your credit report, you need to get your report from the reporting agency. The company you applied to must supply the credit bureau's name, address and telephone number.

3. Examine your report carefully. The Credit Bureau generates your report on information they receive from your creditors; it DOES NOT verify.
Keeping your credit report a true reflection of you is solely your job. Carefully look for everything from typing errors, outdated and incomplete information to inaccurate account histories. You will want to make a thorough list of items you dispute and why. Be meticulous.
If the negative information in your report is true, only time and improved habits can change that. Late payments and charged-off accounts, bankruptcies remain on your report for seven years. Most creditors, however, look for a pattern of payments rather than focusing on one-time or rare occurrences; so consistent on-time bill payments will improve those blemishes.

4. Dispute and document. You can either complete the dispute form provided with your credit report or write a letter. Clearly identify each mistake and state why it is wrong. A recommendation is to send a photocopy of your credit report with the mistakes circled to the reporting credit bureau. Include copies of supporting documents.

Keep copies and records of all the forms, letters and documentation that you send to the credit bureau. You may also want to preserve the sending dates of any information and documentation. The credit bureau will investigate any relevant dispute within 30 days of receiving your letter. Any item that is not verified as accurate by a creditor is removed.

Sometimes it's necessary to contact your creditors to resolve mistakes.
If the Credit Bureau makes any changes to your credit file, it will send you the results and a free, updated copy of your credit report. Once a negative item is removed from your report, the Credit Bureau cannot put it back on unless a creditor verifies its accuracy and completeness, and sends you a written notice.

5. Solve and dissolve debt. Now is the time to devise a spending plan that reduces your debt and sets you up to pay on time, every time.
If you are having difficulty making payments, be proactive. Call your creditors and negotiate to keep your accounts current and from being reported as delinquent or "bad debt." You can ask for reduced monthly payments, or even change due dates to balance out your monthly bills.

The same strategy can be used for fixed-loan payments. Remember, though, that this is a short-term strategy. You will pay more interest to extend the repayment schedule, but it allows you to stay current and save your credit rating. Use the extra money to pay off debts one at a time, gradually increasing payments to other debts.

Slowly close out unneeded or unused credit accounts. Most experts recommend carrying between two and four major cards.
Remember that cutting up the card does not close out the account. Here is a step-by-step guide to smartly close out your account.

Other tips:

• Close out your newest accounts so that you do not lose your longer credit history.
  
• Close out accounts slowly over several months.
  
• Verify that all accounts you have closed are reported as "closed by consumer" for the best report.
  
• Even if creditors offer to raise credit limits, allow yourself only moderate credit limits.
  
• Keep your balances low and avoid revolving balances.
  

6. Add stability to your credit file. You can also work to add positive information and show stability in your credit file.

You may have been denied credit because of an insufficient credit file, yet you have credit. Some creditors, such as services providing companies, small banks and credit organizations, may not report your credit history to the credit bureau. You can try asking the credit grantors to report your account information and monthly payment history to a credit bureau. Not all will do that. So, in the future, before opening a new account, ask if your on-time payments will be reported monthly to a credit bureau.

If you have really bad credit, perhaps even filed bankruptcy, do not let your credit status go dormant. The faster you begin to re-establish good credit, where you pay on time, every time, the faster you will improve your credit rating.

Build a solid credit history. A secured credit card offers those with no credit and those repairing their credit this opportunity. Shop around for the best deal available, but limit your applications, since a sudden flurry of "inquiries" results in a lower credit rating, because many times consumers anticipating money problems increase their credit lines. Inquiries made by creditors wanting to make "prescreened" credit offers are not counted.

Lastly, open a savings account at your bank. This shows creditors that you are working to save and that you have reserves to repay debts.