2 Things To Do In 30min To Raise Your Credit Scores 40-100 Points

It is important to understand how the three major credit bureaus, Equifax, Experian, and Transunion calculate your credit scores. This is not something that a lot of people know, and I am sure you have never been taught this information.

I will do my best to keep simplicity in mind as I explain what makes up your credit scores:

Your Payment History (35%) Makes up the largest factor in determining your score. This is a picture of how you pay your bills.

Credit Utilization 30%: This is the percentage of available credit used. We want to keep our balances below 50% of the limit ideally. This is where we will find the most room for improvement in most cases.

Credit History 15%: How long your accounts have been open. Longer more established accounts are more positively weighted 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%: 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.

Get an increased credit limit. This is very simple to do, and I think you will be pleasantly suprised by the success rate if you just make a couple easy phone calls. Just pick up the phone and ask to raise your credit limit. Now you can also use my favorite strategy and say something like, "I am considering a balance transfer to another card with a higher limit and better interest rate, but thought I would see first if you would increase my limit and possibly lower my interest before I cancel this card.". I have found this to be successfull nearly all the time, both personally as well as with my clients.

As an example scenario, let's pretend that you have a credit card with a $5,000 limit, and a balance of $4,000 (80% utilized). You make a 10 minute call and get you limit increased to $6,500 which means now you are only 62% utilized. Much better, and immediately, your scores increase. Now we can do even better, which brings us to the next technique.

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.

These are very powerful techniques. I have seen this work for clients time and time again. One client recently was able to raise the credit limits on 3 credit card accounts and raise their scores by 105 points immediately.

These simple tactics are more appropriate for someone with a good payment history on established credit card accounts. It is recommended that you have at least 3 open credit card accounts to maximize your scores. One of these could be a department store account. If you don't have enough credit, or have a negative credit history, perhaps more aggressive credit repair or credit building strategies would be more appropriate for you.

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Jon Ochs has over 12 years of experience in the credit and debt field and is the founder/CEO of NCA Credit Repair, one of the most trusted and respected Credit Report Repair companies in the nation.

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