Prime Rate Credit

Credit ratings serve the purpose of evaluating the credit worthiness of an individual or a business. A credit rating is assessed by your current assets and liabilities and your financial history.

Credit ratings are used to inform a lender the probability of an individual or business paying back a loan. A credit rating is determined from a credit history that is put together and maintained by credit bureaus. In addition to credit ratings to determine credit worthiness, there is a 3 digit credit score that is defined by an independent financial services such as FICO which stands for Fair Isaac Corporation.

This information affects a person’s or company’s ability to borrow from financial institutions. Credit ratings also can effect the amount needed for a deposit on a utility or rental, the amount of interest on a loan and even eligibility for employment.

Credit ratings from FICO range from 300 to 850. The higher the number, the better your rating will be. Since having a high credit rating works in your favor financially, every effort should be made to improve your rating.

There’s a variety of steps you can take to improve your credit rating. Register to vote as this shows proof of residency in any credit searches. Opt for a fixed land line for your telephone and use this number on any applications for credit. Staying with the same employer, bank and residence for a long period indicates stability.

Time applications for credit, cell phones and insurance so they are further spaced apart. Too many applications for credit close together can negatively impact your credit rating. If you have credit cards you are not using, cancel them. This will lower your credit available and positively effect your credit rating.

If you have no credit history, you can build a good credit history by obtaining a credit card and putting a small amount on it each month then paying it off in full. This way, you’ll avoid interest and, after 6 months to a year, you will be on your way to building a good history.

If you marry and your partner has a poor credit history, it won’t effect your rating unless you have joint bills. You can keep your finances strictly separated and your credit rating will not be adversely effected. If you’ve split up with someone, let the credit agencies know about the “disassociation” so your ex-partner’s credit can’t effect your future finances.