Things to do to raise credit score quickly

by


If you have good or bad credit, and your credit score needs a little boost to obtain favorable terms for new lines of credit, there is one thing you can do to raise your credit score quickly.


Information about you and your credit experiences, like your bill paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical formula, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. A total number of points called a credit score helps predict how credit worthy you are; that is, how likely it is that you will repay a loan and make the payments on time. Generally, consumers who are good credit risks have higher credit scores.

The current amount of money you owe and the amount of available credit is 30 percent (over 250 points) of your FICO credit score. This factor is your outstanding debt and how much money you owe on your credit cards, car loans, mortgages, home equity lines, etc. Most importantly is the total amount of credit you have available. If your credit cards are maxed, it tell creditors that you utilize your credit close to 100%. Even worse, is if your credit cards are over the limit, putting your credit utilization over 100%. This tells creditors that you are not managing your credit as good as you should be, letting them to believe you are a higher credit risk.

Credit scores change on a month to month basis as creditors submit your payment history to the credit agencies. In order to increase your credit score quickly, assuming you have open credit cards and your balances are close to the max, you need to pay down the amount owed on your credit cards. Ideally, paying down your credit cards to under 50% of your total credit line will help to increase your score the most. However, any decrease in credit utilization will help.

Other factors that effect your credit score, but can only help raise it over a period of time is payment history, length of credit history, having a mix of credit and inquires for new credit.

Did You Know? A new law requires commercial websites that say they offer free credit reports to include a box letting you know you can get a free credit report at www.AnnualCreditReport.com. Click on the link to www.AnnualCreditReport.com, the only place to get the free report that's yours by law. Many companies claim to offer free credit reports and some do, but others give you a report only if you buy other products or services. Still others say they’re giving you a “free” report and then bill you for services you have to cancel. If you go to www.AnnualCreditReport.com and follow the prompts for your free credit report, you can be sure the reports you get really are free.