How To Increase Your Credit Score
by Marco Carbajo, Guest Blogger
- Created: August 14, 2013, 6:37 pm
Are low credit scores (FICO® Scores) holding you back from getting the credit you need?
What would an extra 20, 30, 50 or even 100+ points more do for your credit scores?
If you are looking to learn how to increase your credit score, you’ve come to the right place.
Whether you are trying to obtain a credit card, buy or lease a new car, purchase a home or simply raise your scores, I’m going to share with you a simple yet powerful way to do just that.
Did you know 30% of your credit scores (FICO® scores) is impacted by your debt to credit utilization?
Credit utilization is the ratio of your credit card balances to credit limits on your credit reports. To find out your credit utilization, divide your credit card balance by your credit limit. Then multiply it by 100.
If you have been asking yourself "How can I improve my credit score?" you should keep this number under 20%. One of the best ways to lower your credit utilization is simply paying down your revolving credit card debt.
Another strategy is transferring a portion of your balance from one credit card to another card with much lower credit utilization.
It’s far more effective having two credit cards each carrying under a 30% debt to credit utilization. Less effective is having one card carrying 90% credit utilization and the other card carrying 10% credit utilization.
The FICO® scoring model not only looks at your credit utilization for each of your credit cards separately, but it calculates your overall credit utilization as well. High credit utilization in either category can have a negative impact on your scores.
Another way to increase your credit score is by increasing your credit limits. If your individual and overall credit utilization is high, you can lower this number immediately by increasing the amount of credit you have available.
This is accomplished by requesting a credit limit increase from your credit card issuer. Keep in mind that this should only be done if you have great payment history with your credit card company.
Lowering each individual credit card and overall debt to credit utilization could dramatically increase your credit scores depending on how much of a difference you make.
There are many ways you can learn how to increase your credit score, but the real key is learning how to play the game. You can find out more information on how credit scores affect the price of credit and insurance here on IRS.gov.
About the Author
Marco Carbajo is CEO of the Business Credit Insiders Circle (www.businesscreditblogger.com), a step-by-step business credit building system providing lines of credit, trade credit and funding sources.
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