1st Real Estate Search

Let me start off by saying that understanding how the three major credit bureaus arrive at your credit score is one of the most powerful pieces of knowledge you can have. Most likely this is not something that you have ever been taught. In fact, when it comes to your credit scores, the three major credit bureaus, Equifax, Experian, and Transunion, run sort of a “black box” operation.

Here’s how it all goes …

Payment History - 35%
Your payment history is the biggest piece of the credit-score-puzzle. It indicates how well you’ve made payments to your creditors.

Credit Utilization - 30%
Your credit utilization is how much of your credit you’re currently using. An easy way to boost your scores is to keep your balances below 50% of your total credit limit.

Credit History - 15%
Your credit history reflects how long your credit has been open. Older accounts receive more positive weight than newer accounts.

Recent Inquiries 10%:
Whenever you apply for any kind of credit, a credit inquiry is reported. Too many of these, and they can negatively effect your scores.

Types of Credit In Use - 10%
Your types of credit in use lists how many accounts you have, and what kinds of accounts they are. Having too many loans can lower your scores.

If you’re looking for a few ways to boost your credit scores, here are some ideas!

Raise your limits!
Raising your credit limits is much easier than you might think. Most people don’t realize that just by simply asking for a credit limit increase, you will most likely get one. We have proven this over and over again with clients. Just call the phone number on the back of your credit cards, and tell them you are considering transferring the balance to another card with a higher limit and lower interest rate, but that you would like to keep the account if they could just raise the credit limit. In my personal experience, it has worked 100% of the time. Often they will also lower the interest rate as a bonus. Lowering the interest rate will not help your credit score, but it will sure help your finances.

For example: Say you have a credit card with a $5,000 limit and your balance on it is $4,000. That would mean that 80% of your card is being utilized. One fast phone call gets your credit limit raised to $6,500. Your credit utilization is now 62%, which will vastly increase your scores. As stated above, keeping your balances below 50% of your limit would help you immensely.

Lower Your Balances: Referring to the example above, your credit utilization on your card is at 62%. There’s even more you can do to improve your credit with this one account! Bringing the balance down to 50% would mean making a one-time payment of $750. And even if you can’t afford to pay the $750, you’re still better off than you were before, thanks to the new high credit limit you received from that phone call you made. If you’re trying to make a big purchase (such as a home or a car), though, you’ll wind up saving yourself thousands of dollars on your new loan as well as being granted an even lower monthly payment, if you pay down your existing accounts. The result will be higher credit scores and your loan terms will be even improved as well!

The aforementioned tips have proven to be very powerful and effective in the past and have shown to help people achieve better credit scores. One person in particular was able to get the credit limit on 3 of his cards raised, and his scores increased by 105 points immediately.

Keep in mind that these techniques work best for those who have a good credit history, and at least 3 open, established credit accounts. For those with more challenged credit or a negative credit history, a more aggressive approach and credit repair strategies may be more appropriate.