The first thing to understand is your actual credit rating itself. This is a 3 digit number which essentially quantifies your creditworthiness. The higher the better so your first job is to find out how you are currently rated. This is definitely a good idea as this knowledge will help you to understand how to go about improving it. As a general guide, a credit rating above 750 is indicative of excellent quality, above 650 means that you should not have difficulty in obtaining common forms of credit and below 650 indicates that you have some work to do!
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After verifying your score the next step is to try your best to check that your credit rating is actually correct. There are many cases when it is not, so before you get despondent with yourself remember that if you have been given a low score then it might not actually be of your own doing.
Assuming that you are pretty sure that your credit score has not been calculated in error then an important thing to understand is actually how it is computed. Well over half of your rating is determined by how often use credit and how reliable you are in paying it back. Therefore, a great simple way to bump up your rating is to start borrowing more and then quickly repaying it. On a day-to-day basis credit cards are a great way to do this and provided you set up a regular automatic payment from your bank then there should be no extra costs in terms of interest charges.
If your credit score is especially low then it can be tempting to begin paying off your debts and shutting down the lines of credit that you no longer use. However, this is probably a bad idea as the credit agencies will penalize you as you are effectively using less credit. So provided you are not getting charged substantially for the privilege, leave these credit lines as they are. Even if you are not regularly using them.
You might consider researching the possibility of reducing high interest debt (especially no-money-down credit lines) or paying it off completely by reducing the equity in your home. Mortgage debt is seen in a lot better light than outstanding balances on credit cards for example.
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