How to Improve My Credit Score

Posted by Admin on February 18, 2010
Filed under Credit repair | Comments (12)

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Credit Score is like the exam score with minimum cut off to get admission into a prestigious college. Brings back the memory of olden days when students ply around colleges for good education for better jobs. Securing higher marks is similar to gaining credit score increase.  

I would not be talking about how to increase or enhance your Credit Score since I believe, no matter what your score is it’s never enough. We feel that we could have got a better bargained APR for the new car we have purchased. 

Equifax uses Beacon score FICO and Experian used Fair Issac FICO. The algorithms used by each are different but they have similar weightage for factors. This is precisely the reason why all the three Credit Rating agencies have different scores. They might not vary much. 

One advice for increasing your credit score which many experts give is to increase credit limit on your credit cards. This is a time tested solution for a ‘credit score improve’ key. 

What is the acceptable ratio of credit limit and utilisation? It is considered to be safe to utilise 30 % of your existing credit limit. Above 50 % is still OK but if you are over drafting on your credit card, then your credit score will fall drastically, even before you knew it. 

What should one do when credit card companies are reducing credit limits and unused credit lines?  

There are companies where you can formally make request for credit limit increase. Wells Fargo and American Express are two such Credit Companies which do have the credit limit increase option. There are policies attached to each of them but they are by far the best ones to try for credit limit increase, thereby leading to credit score increase. 

Another advice which I use to increase my credit score is balance transfer. 

I try to reduce the overall limit on my credit cards by consolidating them and transferring balance from a higher utilised card to a lower utilised card thereby also benefitting on the interest rate that is applicable. 

Credit card is a revolving debt and is looked with more suspicion than any other loan like a mortgage or a car loan instalment. 

The balance transfer is bit tricky; you need to check the benefit you get moving from one company to another. What are the applicable rates? And are there any hidden charges? 

One thing I use is I call up my credit company and inform them about my intention to transfer my balance since I am looking for a consolidation. The original credit card company then tries to retain a customer and negotiates a better rate. Either ways you win. Overall less credit utilisation reflects well on your credit score report  

There is another part which is very important and which can negatively affect your credit score is if you were to pay an older credit in full and expect it to do good to your credit report. The reason being if you are paying an old credit which you did not pay so long and it was approaching the Statute of limitation, then it means by paying you have made it current and you did not even ask the people to remove the negative from your credit report. This will decrease your score rather than increasing it.

Improving your credit score on your own is the best way to do it. Please do not try to go for quick fixes they can affect you badly. Especially do not try to get involved in identity theft. People try to create different credit files for the same name.

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