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Having a poor credit rating and being aware of your credit score, can be a good thing. In this article, we will discuss what makes a poor credit rating, how it affects you and what you can do to increase it. Knowledge is power and the power to increase your credit rating can make your life easier in many ways.

A weak or poor credit rating, also known as your FICO score, is a score below a 620. The 3 credit bureaus assign FICO scores that range from 300 to 850. The lower number represents a poor credit rating where the higher number stands for a positive credit score.

A poor credit history can cause you all kinds of headaches. Most people are aware that a low credit score can cost more for a loan because of higher interest rates and finance charges. In addition, your FICO rating may be pulled for a number of reasons, including trying to rent an apartment, student loans, getting insurance or applying for your next job.

Employers, insurance companies and those that rent homes or apartments now use your credit score to determine how responsible you may or may not be. In effect, your credit score has now become almost as important as your background check.

Where this may sound scary, the good news is that you can improve your poor credit score and turn things around. Here is how:

Pull Your Credit Report

Pulling the credit report from each credit bureau will give you the most accurate picture to help you begin improving your poor credit rating. The three credit bureaus are Transunion, Equifax and Experian. Once you have received these you will want to go over them with a fine-toothed comb looking for errors or inaccuracies.

Correct Mistakes

Using the websites of each of the credit bureaus do what you can to dispute inaccurate markings. The credit bureau has the responsibility of addressing any questions you bring up about your report. Each credit bureau has 30 days to produce the proof of what is reported or they must remove the negative mark from your report.

Look For the Overlooked

Check to see if there are small outstanding balances on credit cards that you were unaware of. If you find this, pay them off and contact the credit card company to close out the account. Your FICO score is partially scored on your line of available credit and closing out these accounts can free up borrowing space improving your poor credit rating.

Pay Your Bills on Time

The manner in which you pay your bills is called your credit history and makes up 35 percent of your credit score. Paying your bills on time is the quickest way to improve a poor credit rating. Your credit history is probably the best indicator of whether or not you are a responsible person. Making improvements in this area will show all concerned that you can be trusted with your commitments.

The awareness of your poor credit rating along with the knowledge of how to repair your FICO score, can be a good thing as you move down the road to a better FICO score and history.

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By Mike Reitz
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