How to improve your credit rating even if you owe nothing

If you are one of the many who got into trouble with debt but cleaned up the problem, you may be stuck with a low credit rating.  You would think that being debt free would be good for your credit rating, but usually it is not.   The credit reporting agencies (CRAs) usually rely on how you handle outstanding debt to decide how good a credit risk you are.  If you have no debt, you could be stuck with the rating you had before you cleaned things up.

Now the Wall Street Journal reports that CRAs are looking at other ways to assess credit worthiness.  Things they are looking at include how you handle utility bills (cable, gas, electric, phone) and rent payments, your employment history (fewer job changes is better), your address changes (again, fewer is better), and whether or not you use prepaid credit cards successfully.  If these things look good, your score should rise, but it takes time.

One prepaid credit card, Eufora claims to set up your credit with a small loan so your payments get recorded as loan payments and reported to the CRAs.  We cannot say how well this works, and it isn’t cheap; but if you are in a hurry to improve your credit score it might be worth checking out.

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