How To Improve A Low Credit Score

Do you have a low credit score?

If your credit score is below 700, you may not qualify for some of the best interest rates on credit cards, loans or mortgages. This means that just by having a credit score of 695, instead of 725 (just an example), you may end up paying thousands more in interest on any new credit you are granted, which you can avoid by just taking some simple steps to increase your credit score before applying for a new personal loan, auto loan or mortgage. It is widely believed that a credit score of 720 or higher is ideal.

How to improve a low Credit Score

If you have a recent bankruptcy on file, repossession, foreclosure, missed or late payments... it will take time to bring your credit score back up after such a blow. If you are in this position, in the mean time just be sure to borrow "within your means" (although you may have trouble getting approved for any new credit) and don't overextend yourself. Keep paying your bills on time, and you will be back on the road to raising your credit score.

If you pay your bills on time, don't have a recent bankruptcy on your record, and don't have any missed payments or collections on file, look at your credit card balances. Normally you will want to keep your debt-to-credit limit ratio, on your credit card accounts, below 25%. If you owe more than 25% of your total credit limit on your credit cards, consider paying them down.

Example: if you have a credit card with total credit line of $10,000, and you have a balance of $2,500 on the card, you would owe 25% of your total credit line on that card.

Also keep in mind that even if you pay your credit card balance off each month, it still may be reported to the credit bureaus that you are carrying a balance on that card. It depends on what time of the month your credit card issuer reports to the credit bureaus, they will list whatever your balance is on the day they report it. However, most (if not all) lending institutions are aware of this, so this is generally not something to worry about.

Too many open credit card accounts

Also, too many open credit card accounts can be a bad thing. But, if you already have several open credit card accounts in good standing, don't cancel them, the added "good" credit history can help your credit score. If you find that you have way too many open credit card accounts and you have decided to cancel some of them, be sure to cancel the most recently opened accounts. Keep the oldest accounts open. Normally the longer your payment history on an account, the better your credit score will be.

Try not to open any new credit card accounts that aren't necessary. Generally when you open a new credit account, it will lower your credit score slightly, at least for a short period of time.

How you manage your "revolving credit" (credit card accounts) is a big factor in determing your credit score.

Newly Opened Credit Accounts

Usually your credit score will take a slight hit from newly opened credit accounts such as credit cards, auto loans, or mortgages. How many points your score will decrease depends on how many times you have applied for credit in recent months.

However, this decrease is only temporary, your score should rise again after several more months of making your payments on time. Normally this is not something to worry about, unless you have submitted many applications for new credit in a short period of time. That may indicate to credit issuers that you are beginning to overextend yourself (applying for too much credit), or that you are being denied credit and you keep trying other lenders hoping for a different result.

Short Credit History?

If you have a very short credit history (length of time you have been using your credit), that can also be a reason as to why you have a low credit score. Keep paying your bills on time and follow good overall credit management, and rest assured - with time - your score will rise!

No Credit History?

If you have absolutely no credit history, your credit score will most likely be low to start with. You can get started by applying for a credit card in an attempt to establish your credit history, or if you are trying to obtain an auto loan, but haven't had any luck getting approved because of a short credit history (or no credit history), you can ask someone you trust to help you by co-signing on a loan with you.

These are just 2 of the ways you can start establishing your credit, but probably the 2 most common ways. When you are approved for your first credit account, be sure to pay your bill(s) on time, and you will be on your way to a better credit score!

How to Evaluate and Raise Your Credit Score

Why do some people get offers for pre-approved credit cards and others don’t? What do car dealers know about your financial health that you don’t know? The answer is your credit score.

Your credit score is a number generated by a mathematical formula to estimate how likely you are to pay your bills. Based on the information in your credit reports from the three credit bureaus, Equifax, Experian, and TransUnion, your credit score has been a factor in your ability to qualify for loans and good interest rates for more than twenty years. Lenders compare your credit report with millions of others to determine your score.

While there are a variety of credit scoring methods available to lenders, the most widely used is the FICO score. Based on a scoring system developed by Fair, Isaac & Co., FICO scores range from approximately 300 to 800 points and are provided to lenders by the three credit bureaus. You also have access to your FICO scores but will be charged a fee by each credit agency providing your report.

According to Fair Isaac, the credit scores of the American public are divided as follows:

• 499 and below 1 percent
• 500-549 5 percent
• 550-599 7 percent
• 600-649 11 percent
• 650-699 16 percent
• 700-749 20 percent
• 749-799 29 percent
• 800 and above 11 percent

A score of 720 or higher will probably get you the best interest rates on a home mortgage. Your credit card company looks at your credit score to decide whether or not to raise your credit limit or charge you a higher interest rate. The higher your credit score, the better you look to lenders and the lower your interest rates.

Several factors affect your credit score including your payment history, the length of your credit history, any outstanding debt, how long and how often you’ve had derogatory credit information, such as bankruptcies, charge-offs, or collections, and the amount of credit you are using compared to the amount of credit available to you.

So how do you raise your credit score? Well, the first thing to do is to order a copy of your credit report with the score included from each of the three credit bureaus. Review your reports and note any discrepancies. Correcting blatant errors is the first step to repairing your credit, and changes can take up to three months to be recorded.

Next, remember to pay your bills on time. It may seem like a small thing at the time you’re writing that monthly check, but an accumulation of timely payments says a lot to a potential lender looking for a reliable client. Prompt payments in the last few months can actually make a big difference in your credit score.

While collections, bankruptcies, and late payments have the greatest negative effect on your credit score, your debt is a factor as well. Keeping your account balances between 25% and 50% of your available credit signals a responsible borrower. For example, if you have a credit card with a $2000 limit, keep your debt below $1000. For this reason, consolidating your credit card debt can actually lower your credit score, as it raises the ratio of your debt to your available credit. The best solution is to simply pay off your existing cards as quickly as possible.

Excessive inquiries over a short period of time also damage your score. When lenders, banks, or credit card companies check your credit report, the inquiries are recorded. Several of these “hard inquiries” in the same time period may signal to other lenders that you are opening multiple accounts due to financial difficulty.

If you discover that you have accounts on your report that you didn’t open, or your public records such as tax liens or judgments that are not yours, you may be a victim of identity fraud. It is up to you to deal with the damage that can happen to your credit score because of this criminal activity. Being aware is your first step, but when the items end up on your report, you have no alternative but to clean it up.

Overall, give yourself time to build a good credit score and even more time to correct serious problems. The length of your credit history is another determining factor in a good score. Lenders want to know that you are able to maintain prompt payments and good standing for a period of time. So check your reports yearly, do your due diligence, and your score can improve.

How I Raised My Credit Score 40 Points In 24hrs. And Saved $658 A Month In Interest

It’s never easy to talk about credit. Not with friends, not with family, not online, and, most of all, not with myself. Yes, I let a monthly payment go by here and there. I’ve maxed out my share of credit cards. I’ve bought cars that I really couldn’t afford. I ate out. A lot. At expensive restaurants. And I always ordered the lobster. I always knew, in the back of my head, that I was teetering on the brink of credit destruction. Yet I couldn’t bring myself to admit that my credit was going downhill. I continued applying for credit cards anyway. I didn’t want to run them up, honestly. It just happened.

One day, reality gave me a swift kick in the rear. I grew weary of renting, so I decided to pursue the proverbial American Dream and purchase a home. I sort of knew that my credit was troubled, but I kidded myself into thinking that it couldn’t be that bad. I went to a mortgage company to finance my dream. When I got there, I filled out an application, and they pulled my credit report. I truly was not prepared for what the loan officer said to me next. “I’m sorry, sir,” he said, “your application has been declined.” I was absolutely stunned and numb. I could not believe my ears. My dreams were decimated in mere seconds. I left the office so dumbfounded that I didn’t even remember the drive home. I got back to the apartment and I torched every Homes For Sale magazine in the fireplace.

From that very moment, I resolved to clean up my act. Not knowing much about credit, I had to swallow the last ounce of pride I had and called up the loan officer I met with. They have general guidelines for approving mortgage loans, he explained. One of the major factors that go into an approval is your credit score. Quite simply, the higher your credit scores, the better your chances of being approved. What’s more, the higher your score, the better the terms of your mortgage; that is, better interest rates, better payments, and lower down payments to name but a few. In my particular case, my score was low. Their minimum requirement is a score of 620. My score was 604.

The only way that I could get an approval for a home loan, he said, was to raise my credit scores. The good news, he said, was that he could refer me to their sister company. They specialized in approving mortgages for people with challenged credit. In fact, they have been known to approve loans for people with scores as low as 500!

With a glimmer of hope, I contacted the company he spoke of, known as a “subprime lender.” Sure enough, they had good news for me. “We received your application from our sister company, and I’m happy to tell you that we are able to approve you for a mortgage!”

Something didn’t feel quite right, though, so I asked about the terms of the mortgage he approved. It turned out that their loan was going to cost me a whopping $7896.00 in additional interest for the first year, which amounted to roughly an extra $666.00 per month! That was about twice what I used to pay on my car. Think about that…because my scores were so low, I had to pay the equivalent of two car payments in order to purchase a house. Heck, I could’ve bought a Mercedes with that kind of money, although I probably wouldn’t have been approved for a car loan anyway. Not only would the extra interest have a disastrous impact on my bank account, it would price me completely out of my dream home – a terrifying thought indeed.

While I celebrated the approval, I shuddered at the terms. I begrudgingly went forward with the lending process. Although I loathed that extra interest, I hated the thought of not owning a home even more. In the meantime, I resolved to find another way. Either I could sign their loan and pay almost $8000 extra just in interest, or I could try again with the first company after raising my score. To me, the choice was clear. At the time, there wasn’t much I could afford anyway, let alone two cars’ worth of payments. I resolved not to pay any more than was absolutely necessary to purchase the house. I had to repair my credit! With no money in the bank and no room on my credit cards, I simply could not fathom spending $400-$500 on a credit repair agency. My creativity had to exceed my financial means for me to get the results I needed.

I was able to obtain a “tri-merge” credit report and found my aggregate scores were 604, 576, and 606. A tri-merge refers to a single credit report that contains information, including scores, from the three major credit reporting bureaus; namely, Experian (formerly TRW), Equifax, and TransUnion. Each has a unique formula for scoring your credit. Many mortgage companies will use a tri-merge report to determine whether your creditworthiness deserves an approval. Depending on the mortgage company, they will consider one of your three scores and go from there. In my case, the loan officer advised that I needed to get one of the numbers up to at least 620.

Throughout the course of my research, I found a lot of resources that explained the credit repair process. One of the most common methods is to write letters to the credit bureaus, disputing the erroneous information on my credit report that caused my scores to decline. In fact, the credit bureaus themselves explain this process. Basically, you scour your report and locate invalid entries, such as an incorrect credit limit, or even an entry that’s not yours. Then, you write a letter to the credit bureau explaining that the information is wrong and ask for it to be removed. If they manage to confirm that the entries are correct, then it stays on the report. If they can’t confirm it, off it goes. Make no mistake; this technique is quite effective if done correctly. The problem is credit bureaus, by law, have thirty days to investigate the information. That doesn’t even include the time it takes to mail my dispute, and for them to mail an answer back letting me know what happened. At best, it would take about 40 days before I knew anything. I simply could not wait that long. Plus, there was no guarantee that they would remove the information anyway.

Undaunted, I continued my quest to boost my credit scores quickly and inexpensively. Time was running out, however. The closing for the subprime mortgage was only days away. My persistence was rewarded when I managed to discover little-known methods that I utilized to increase my score. As a matter of fact, my Equifax score went from 604 to 644 in only 24 hours! Like a thermometer next to a blue-hot flame, my score shot up 40 points, literally, overnight. I went back to my loan officer, and he was flabbergasted. Never had he seen anyone raise their credit scores so quickly and dramatically. He put my application back through. Miraculously, I was approved!

I saved myself hundreds of dollars a month, and thousands of dollars a year by being able to raise my credit scores. The best part is that, because of the techniques I used, it only took a matter of days and not months like the credit bureaus would have you believe. There’s an adage that says “Cash is king.” These days, it’s more accurate to say that “Credit is king.” Your credit scores have so much impact on your life that it would be catastrophic to take them lightly. By raising your credit score, you can experience the same kinds of savings that I achieved. You’ll be able to better afford that dream home or dream car, and you’ll realize the benefits for years and years to come.

Five Ways To Improve Your FICO Credit Score, Get Lower California Mortgage Rate

Over 30 million people in the U.S.A. have credit scores low enough (less than 620) to make shopping for low mortgage loan rates very difficult at best.

The major credit reporting agencies use a slightly different system to arrive at a credit score. The best known is called the FICO score, developed by Fair Isaac and Company (FICO).

A FICO credit score can range from 300 to 800. Most borrowers fall into the 600-800 credit score range.

A high FICO score is your reward for paying bills on time. This is one of the most important factors that determine your California home mortgage loan rate

If you've had a few credit "bumps in the road" recently, and you're asking yourself, "How can I improve my FICO credit score"? Here are 5 ways to boost your FICO credit score.

1. Paying your bills on time is the first step in improving your FICO credit score. Late payments can have a big negative impact on your FICO score, 30 days or more late on one account can lower your FICO score 50 points or more.

If you don't like writing checks, go online and automate your bill paying.

2. Don't max out your credit cards. The smaller balance gives you a wider difference between your balance and your credit limit.

Also, if you are planning to purchase a new car or other major item, wait until you get that low mortgage loan rate.

3. If you are sincerely interested in improving your FICO credit score, bankruptcy MUST be avoided! Bankruptcy is more negative than late payments or collection accounts.

4. Get credit counseling if you have too much debt and begin to fall behind, or can't see a way out.

5. Keep old paid off accounts in an open status. If you close an account, it won't help your FICO score but it could lower your credit score.

If you close an old account it could make you look like a "rookie" in the credit world. A factor in obtaining credit is how long you've had credit.


If your FICO credit scores are over 620, but you want to raise it, obtain a copy of your credit report and request that the credit bureau remove any errors.

A Love/Hate Relationship: How your credit score can open and slam doors for you

There are many ways to get ahead financially: attend seminars where you cut up your credit cards with hundreds of other people, participate in debt consolidation services that help you take out a home equity loan or refinance your home, or you can transfer debt on one credit card to another credit card with an introductory rate of 0% (which goes up to 12% six months down the road). The reason these methods don’t work is because we don’t concurrently cut our expenses while implementing these strategies. Even if we’re making more money, unless we cut expenses, we will continue to spend more money than we have and incur debt. Manage yourself and your money. Money is like food; we don’t eat only when we’re hungry, and we certainly don’t spend only when we need something.

Beware: Debt forgiveness can hurt you. The company that forgives your debt can issue a 1099C, which means the forgiven amount gets added to your taxed income.

When there’s a will, there’s another way:
Your credit score (also called your FICO or Beacon score) will affect the interest rate you’re able to secure. Credit scores range from 500 to 850. Where are you on the scale?

What’s in a number?
500 and below—your in serious trouble
650 to 680 you probably will have a difficult time getting credit, and if you do it will be at higher rates
700+--excellent score

How you got your credit score:
a)    Payment history (35% of score). Make payments on time or early.
b)    Amounts you owe (30% of score)
c)    Credit history (15% of score). The longer you have credit, the higher your score can be.
d)    New credit (10% of score). New credit cards.
e)    Type of credit you have in use. Mortgages, Bloomingdale’s, etc.

There are three reporting services that can give you your score: Equifax.com, Experian.com and Transunion.com. At least once, do an experiment and order a report from all three. They probably will provide a complimentary report each year, per person. You will most likely find inconsistencies in the reports such as missing and incorrect information. Each time a credit report is run on you, your score is lowered by two or three points. You still want to shop around for a mortgage, but consider using a mortgage broker who runs one report to shop around the loan. If you go to five different banks, that can drop your score 15 points.

5 Things To Protect Your Credit Score This Holiday Season

1. Avoid Department Store Offers for Instant Credit and Don't Open Up New Lines of Credit

"Would you like to save 10% today on your purchase today?". We have all been asked that question when paying for our purchases. Every store under the sun would like to offer you their own credit card. This is not good for your score. The damage to your score you'll incur by opening up a new line of credit is just not worth the few dollars you might save. Department score credit is poor quality credit and the credit scoring system frowns on it. Just don't apply for the card. You may want or need to apply for a new car loan, a new home loan, a re-finance a home loan. By applying for store credit to save a couple of dollars, you could be hurting your chance of getting an important loan at a good rate until the middle of next year.


2. Avoid Overspending

Spending affects credit. 30% of your credit score is made up of how you manage your debt, and when your credit card balances exceed 30% of their available limit, the credit scoring system red flags you and your score goes down instantly. The logic behind this is that if you suddenly max out your credit cards, it looks to the system as though you are in financial trouble. Only charge if you can pay the balance in full before the next statement date. Plus, overspending and overcharging will also cause you to carry larger balances longer. It is best to keep your balances low at all times.

3. Pay Your Bills On Time

Payment history is 35% of your credit score. One 30-day late can cost you 50 points or more. December is traditionally the busiest time of the year. Active calendars filled with work and social commitments for family and friends and the frenzy of the season can preoccupy you and cause you to be late in paying your bills. Make staying on top of your bills a priority. Put all of your bills in a file and make sure you pay them on time. In doing so, you will save points on your credit score and ridiculous late charges as much as $39 or more. Additionally, when you are late in paying your bills, you nullify any preferential finance rate and your account will default to a dramatically higher interest rate. A ding to your credit score, a high late fee, and a huge increase in interest rates are all big incentives to make sure you are on time with your bills. I recently got a call from a customer who had been late, but not 30 days late and the rate jumped on his card to over 30% annually!

4. Take the Time to Plan and Prepare Your Gift Giving

We all do it. We walk into a store ready to buy a specific item and end up getting lured into a spending vortex. Panic spending because the store does not have the item you went in to buy; deciding that if you buy this item for this person, then you have to buy this item for another person; succumbing to the temptation of the latest must-have gadget. You can prevent this well-woven retailer trap by doing your research online. By preparing before you even darken the automatic doorstep of the alluring retail establishment, you can determine where you can purchase specific items and for what price. In doing so, you can avoid the retail traps and retain control of your spending (and your sanity). Online shopping sites have grown tremendously in popularity. Traffic to those sites is up more than 30% from just last year. There is a wealth of information on the web. In fact, pricegrabber.com lists all of the hottest holiday items and tells you who sells them and for how much. Remember, if you pay your credit card bill prior to the statement date, it will help your scores. froogle.com is another great site to find the item for less.

5. Manage Your Credit Wisely

Keep track of your credit card balances and keep them as low as possible. Studies show that as consumers increase their credit card balances, they become increasingly apathetic about their balances and even about adding new debt. By tracking balances, you will maintain a sense of control over your credit score and your finances. Write out a chart of who you owe, how much you owe, and what the minimum payment is. It will help you to get a handle on your bills, and help start planning how to pay them off.

10 Tips To Improve Your Credit Score

These days most of us avail loans to buy a house, set up a business, or buy a car. Many students take loans to further their education. How soon the loan is sanctioned, the rate of interest, and the amount sanctioned will all depend on your credit score which is based on your credit report. People with scores of 700 and more are the beneficiaries of lower interest rates and quick sanctions. Imagine if your score is greater than 700 and another person has a score of 698 then the person with score 698 will have to pay interest that is higher by one-half percentage point. And, this means over a year a person with a lower score will pay USD 19,000 and more as interest on a loan of say USD 165,000.

A credit score takes into consideration: payment history, current earnings, current debt, length of credit history, types of credit utilized, and your new credit. If two or more members of your family are earning then apply for a loan jointly.

You can take a few simple steps and ensure that your credit score is higher than 700.

•    Maintain a long healthy credit history. Keep alive your oldest credit card and be sure to pay all bills in time. Never keep bills pending over a 30 day period. If in a crunch at least pay the minimum charges due.

•    Do not have too many credit cards. Learn to say “NO,” to offers of free credit cards. And, maintain a good credit limit. Avoid using all the available credit on the cards.

•    Ensure that the credit report you have is accurate and that there are no errors clerical or otherwise.

•    Plan your finance such that it is healthy. Consider debt consolidation.

•    Never suddenly close or open accounts. This leads to suspicion that you are trying to manipulate your credit report.

•    If you are having problems speak to your creditors well in advance and work out a stage wise repayment. Request the creditor to refrain from reporting the late payment.

•    Late or delayed payments drive your score down so always pay bills dead on time. Keep a tab on due dates and ensure that all bills are paid.



Learn all you can about credit reports and scores and keep the criteria in mind while managing your finances. Maintain the debt-to-credit limit ratio and, if need be take the help of a finance planner.  A useful source to learn about managing credit is: balancepro /services/index.html they provide in depth coverage on money management, debt management, and credit report review.

Even if advised refrain from filing for bankruptcy. All you need to do is to sit down and curtail expenses, plan you income-expenditure , and avoid spending what you have not earned.