10 Ways To Boost Your Credit Score
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will increase because you now have three new perfect payment
credit cards. (Initially, your credit score might drop a few
points due to the rapid, multiple accounts being opened. However,
be patient because within 4 months of no new accounts or any
delinquencies of any account, you will see your credit score
increase. Mine increased 60 points in 60 days!!)
5. Pay on Time
This one is quite obvious. But after 12.5 years in the mortgage
business, I discovered it still needs repeating. Your creditors
were gracious enough to loan you money. Now pay your damn bills!
If you don't, your credit score decreases. EVEN IF ONLY 30 DAYS
LATE!
That's right folks. For some reason people think, "I'm only a
few weeks late. What's the big deal'" Well, for the loan company,
if you pay late but consistent, they make a lot more money with
late fees and more interest (if a simple interest loan). For you,
your credit score is damaged. If you think long-term and credit
score, I'm certain you would not have a cavalier attitude.
6. Pay Down Debts
This seems like an obvious method, doesn't it' But it is not as
transparent as you might think. Remember, we're playing with
high-level statistics and probabilities which evaluates and
forecasts trends in your behavior. Here's what you do...
Never pay off your revolving debt in it's entirety! Isn't that a
surprise' Think about it. Your credit score is a reflection of
your ability to manage your credit. Paying off your debt is not
managing your debt. If you have a zero balance, how can you manage
it' You don't. It no longer exists. And you cannot manage what
does not exist, right' Therefore, in terms of credit score, you
have demonstrated your ability to swiftly pay off accounts to
avoid managing them. Thus, slightly decreasing your credit score.
One exception, of course, is if you're over extended to begin
with. Pay off what's necessary to make your credit profile look
great. Then manage the remaining credit.
7. Don't Close Accounts
Even if you pay off revolving debts, do not close the account.
The longer an account is open with no negative reports, the
better it reflects in your overall credit score. This is due to
the weighted-average in the credit score formula. Many credit
experts suggest a balance of 30% of your credit limit. That's
ideal. But you can go as high as 70% and still maintain a
healthy credit score.
8. No New Credit
You must be vigilant in your credit behavior if you want the best
credit score. Therefore, do not get any new credit unless it is
absolutely necessary. Each time you apply for credit, an inquiry
is added to your report. This usually drops your credit score
slightly. When you have fresh credit, there is no track record
how you will manage (or pay) this account. Therefore, it's a
higher risk which results in a minor drop in your credit score.
Remember, your credit score is about risk assessment.
Here's what you do: obtain credit for your housing, transportation,
college or continued education and 3-5 credit cards. That's really
all you need for personal credit. If you want more credit, request
a credit limit increase on your current cards rather than apply
for new ones.
9. Maintain A Mix of Credit Types
If you show you can handle different types of credit at the same
time, you are rewarded with a great credit score. In other words,
get installment loans like vehicle, personal loan or mortgage.
Get revolving credit like credit cards: Visa, Mastercard, Sears,
Sunoco Gas, Costco. By mixing it up, you demonstrate you can
manage your credit because you will have short term and long term
credit with a fixed payment. As well as a "variable" monthly
payment on your credit cards.
Keep these accounts open with a balance of 70% or less and paid
on time and you will witness your credit score climb to great
heights.
10. Don't File Bankruptcy or Foreclosure
Here's the most obvious advice: Don't file for bankruptcy or
foreclosure. These stay on your credit report for 10 years and
always decrease your credit score. The older the bankruptcy or
foreclosure account becomes, coupled with re-built credit
history, the less of an impact they play on your credit score.
Contrary to popular beliefs, you can legally delete a bankruptcy
and foreclosure. It's not easy. But it's possible. See the
advanced methods for that solution.
To quickly rebuild your credit history after a bankruptcy or
foreclosure, use the Round Robin strategy above and get secured
credit cards. Now you can even get a car loan or mortgage right
after bankruptcy.
' 2004 David Czach.
About the Author -------- Editor's Note ----------
Dave Czach has 12 years experience in the mortgage business and
a Bachelor's Degree in Real Estate. He can be reached at
http://myLoanHero.com/go.cgi/daveczach.
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