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Improving Your Credit Rating

Businesses evaluate individual credit applications by rating or measuring how a person has handled credit over the past seven years, but often consider information from the past one to three years more important than older information. If you have a low credit rating, you can improve it by adding new, positive information to your credit report, which will help you qualify for additional credit in the future.

Repaying debt and/or obtaining and using a secured credit card are effective ways to start rebuilding your credit rating. A secured credit card is backed by money that you leave on deposit so that if you don't make a payment each month, the creditor or bank is paid from the deposit.

Before you apply for a secured credit card, shop around to find the best deal by asking the following questions:
• What are the basic terms and conditions, i.e., annual interest rate, annual fee, late and cash advance fees?
• Is credit extended to people with low credit ratings?
• Can you qualify if you have declared bankruptcy in the past?
• Will your payment history be reported to all three credit-rating agencies?
• What interest rate will be paid on your deposit?
• What will your credit limit be?
• How long will it take to qualify for an unsecured credit card?

Every time you make a payment on time and in full, you build a record that will improve your credit rating. If repayment is a problem, then use your credit card only for a set amount that you know you can pay. For example, this may mean that you start using the credit card for $10 each month and increase the amount when you are able.

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