| Raise Your Credit Score 30-120 Points In 30 Minutes! |
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| Written by Jon Ochs |
| Friday, 05 June 2009 12:15 |
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The first important step is to gain a basic understanding of how your credit scores are determined. I am sure this will be new information for you, since this is not taught to any of us in school. In fact, when it comes to the three credit bureaus, equifax, experian, and transunion, they prefer to keep everyone in the dark on how credit scoring works.
The first important step is to gain a basic understanding of how your credit scores are determined. I am sure this will be new information for you, since this is not taught to any of us in school. In fact, when it comes to the three credit bureaus, equifax, experian, and transunion, they prefer to keep everyone in the dark on how credit scoring works. To explain what makes up your credit score in as simple terms possible, this is how it works Payment History 35%: This is the largest contributing factor for your credit scores and represents your history of making payments with your creditors. Credit Utilization 30%: The percentage of available credit used. Keeping your account balances below 50% of the available credit limit will maximize your scores. For the purpose of this article, this is where we will find the most room to quickly increase your scores. History 15%: This is how long our accounts have been established. A more established account has more value than a new one. Inquiries 10%: When you apply for credit, an inquiry is made to your credit. If you have too many inquiries, your score can be negatively effected. Types Of Credit In Use 10%: How many accounts and which types. Having too many loans from finance companies (Beneficial Finance, American General, etc.) can bring down your scores. Since we now have an understanding of how scores are calculated, now we can focus on a couple of things we can do right now to maximize our scores. Increase your credit limits: This is actually easier than you think. It is truly remarkable what will be granted to you simply for the asking. What I want you to do is simply call each of your credit card companies and ask them to increase your credit limit. One technique you might also use is to tell them you are doing some financial house-cleaning and are considering getting rid of the card and using one with a higher limit and better interest rate, unless they can give you a better offer. In my experience, I have found this to be successfull 100% of the time. Let's say for example you have a credit card with a $5,000 credit limit, and you currently have a $4,000 balance on it (80% utilized). After your quick phone call, they agree to raise your credit limit to $6,500 (now 62% utilized). This alone will immediately increase your credit scores. Remember in the "Credit Utilization" section above, we want to ideally keep our balances below 50% of the credit limit. This brings us to the next powerful tip. Lowering your balances to add more points. Continued from the above example, you are now utilized at 62% on your credit card. What this means is that you still have room to further increase your scores. If you coule put just $750 on this credit card, you could bring the current balance to 50% of your new credit limit ($6,500 credit limit, with a balance of $3,250). You might be saying that you don't have $750 to put down on your credit card. Ok, you could stop right here, since you already increased your scores, and you can most likely get the limit raised for all your credit card accounts. However, if you are trying to buy a home, or a new car, you can potentially save thousands, or even tens of thousands in interest on that new loan and even get a lower monthly payment, just by paying a little down on your current accounts. When that results in higher credit scores, you may qualify for much better loan terms. In one case, a client paid down $450 on one credit card and was able to increase their scores so they could purchase their new home with zero down, instead of the $5,200 required down payment they were previously facing. Both these techniques are fast and easy, and have been proven to work time an time again. I have used them personally, as well as assisted clients with them. I am confident they will also work for you. Bear in mind that these techniques are recommended to those with a clean credit history. Credit card companies are more willing to work with those that have an established history of making payments on time. If you have negative items on your credit, perhaps a more aggressive credit repair approach is more appropriate. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Daniel R. Michaelson is a well known public speaker and author in the area of credit and consumer debt consolidation and has been helping clients for nearly 20 years. You can learn more about his credit report repair program. |