Millions of Americans are now among the list of those with falling credit ratings due to house prices falling, foreclosures, bankruptcies, and long-term unemployment. There are a few factors that will affect your credit rating along with the steps to improve your rating.
Bankruptcy – both Chapter 13 or 7 – is the worst thing that can be placed on your credit report and once it is there it will take somewhere between 7 to 10 years to fall off the report. If you are involved in a foreclosure, deed-in-lieu, tax lien, or short sale, this will also lower your credit score. If you are in a rough patch and you are pay a bill thirty days late your credit score will drop quite a bit and if the payment is 90 to 120 days late you will notice a larger decline.
In order to improve your credit rating, you need to pay your bills on time. The last two years reports are the most important which will be calculated as 35 percent of your credit score. Do not apply for credit if it is not absolutely necessary. This will also lower your credit score, as it is a sign that you are taking on more debt.
When you have credit cards or other forms of credit, do not use more than 50 percent for any current account as well as focusing on reducing the credit card balances before paying off the installment debt such as car loans and student loans. Credit scores track the oldest account along with the average age of all the accounts combined. Longer credit history will help raise your credit score, so do not close out accounts that have a long history, as they are the most important.
The credit scored is a fluid number that changes often. Consider using an online credit monitoring service that will provide you with access to your credit score and credit history at any given time.