Improve Your Scores

Improve Your Credit Scores

Like so many people, you may have experienced financial catastrophe during recent years of recession. The “economic avalanche” brought massive numbers of jobs lost, business closures and retirement funds vaporized overnight.

A man climbing rows of credit scores to reach the highest scoreMany people haven’t fully recovered and some have given up on ever having a good credit score again.

There are others who discovered the legal methods for repairing personal credit. Credit experts and Loan Officers use these methods to help their own customers raise their credit scores.

You can use them to improve your credit score too. It’s important for you to think in terms of credit scoring systems and how they work.

Vantage score and FICO emphasize recent payment behavior over older payment history. This means you have a way to improve your credit score by managing accounts over the most recent several months.

Even the worst credit history is eventually replaced with payment behavior that is consistent and steady. There are several techniques that work along with this to raise your score within a short time. We recommend credit repair programs using methods that have worked for thousands of people who were desperate to improve their credit profiles.

5 Factors That Can Raise Your Score

Primary factors used in credit scoring systems:

  • Time…
    The longer you’ve held your credit accounts open helps.
  • Payment history…
    Late payments and collections wreak havoc on your credit scores.
  • Credit balances…
    If you’re running high balances, credit agencies assume there’s something wrong.
  • Type of credit…
    Installment loans (auto and home loans) are viewed more leniently than credit cards.
  • New accounts…
    Opening new credit accounts within a short time can temporarily lower your scores*.

IMPORTANT: If a new account lowers your credit utilization ratio then it can improve your credit score.

New credit that’s easy to be approved for such as secured credit cards are your opportunities for making timely payments month-after-month. It’s a proven method to improve your credit score over a short time.

When negotiating with collectors you should insist on a written agreement stating the debt will be reported in good standing upon paying the negotiated account balance. Even better, demand a “Deletion Letter” from them in return for paying off the debt. This is a letter by the collection company telling the credit bureaus to delete the negative item from your credit report. It’s surprising how often they are willing to do this.

Give Your Credit a Boost by Reducing Card Balances

Credit score pie chart to help you improve your credit score.Keep track of how much of your available credit card limits you utilize. For example, you may have five credit cards and each of them has a $1,000 credit limit. This totals up to $5,000 available credit between all five accounts.

If you have charged $3,000 then you have used 60% of your available credit. Carrying this kind of high balance is  considered risky by lenders.

Compare this with using $1,500 of your credit. This would result in only 30% of your total available credit being used (for all cards combined). The lower percentage of credit you utilize has a positive effect on your credit profile, resulting in a higher credit score. We’ve seen scores increase by 27 points that were evidently the result of this single factor, called “Credit Utilization Ratio.”

Acquire the habit of reviewing your credit information at least 2 – 3 times a year so you know these percentages on your accounts.

If you understand why this works then you’ll appreciate a related strategy. Your “percentage of credit used” can be lowered two ways: By either paying down card balances, as we have seen, or by increasing the amount of credit available. This can be accomplished through…

  1. Obtaining new accounts.
  2. Higher credit limits on existing accounts.

Help Your Scores With More Accounts…

As you open revolving credit accounts the percentage of credit you’ve already used decreases. This is just another way of saying that your current balance for all of your credit cards is a lower percentage of the total amount you could use if you wanted to.

From the example given above, not using credit that is readily available to you is a signal to the credit bureaus that you are financially stable. A better credit score naturally follows.

To make this clear, opening new accounts will provide you with a greater total credit limit and this lowers the percentage of credit you’re currently using. If your credit is very bad then getting secured credit cards is a good way to do this.

This strategy works, we’ve seen people use it over and over. And it isn’t even necessary to apply for new credit if you are able to simply raise the limits on your current revolving credit accounts.

Loophole to Boost Your Credit Score

You can optimize your “Credit Utilization Ratio” through raising credit limits on your existing accounts. This new percentage of credit being utilized (your current balance) becomes lower as you make more credit available. This results in favorable credit scores.

If you’ve had financial problems and poor credit, then you can use secured credit cards to increase your credit limits. They raise your limit dollar-for-dollar equal to the amount of your deposit “securing” the credit card. If your goal is to quickly raise your credit score, then it may be worth the extra deposits required for securing the cards.

Now that you have methods for making your credit score better, take the first step and get your credit information. Bookmark this website and use it to learn about credit scores, how they work and how to control what’s in your credit record.

We make it easy for you to order your credit score and report free. It comes with the Vantage Score at no cost and there’s no credit card required.

Review your credit report for negative items. Then follow the advice given throughout this website that will help you rebuild your credit profile and improve your credit score.