| The lending market is getting tougher. On the heels of | | | | Make sure that your credit limit is being reported for |
| the sub-prime market fallout, most lenders are | | | | each account. If an account is not reporting your credit |
| implementing rules and policies that make it much | | | | limit, the system used by the credit bureau to calculate |
| tougher for people to get a loan approved. The end | | | | your credit score will assume that your account is |
| result of this is that if you anticipate wanting to get the | | | | maxed out, which is a negative when computing your |
| best possible rates and terms on a future loan like a | | | | credit score. You get a more favorable score as your |
| car loan, mortgage, or other big ticket items, you would | | | | outstanding balance is closer to zero. If your |
| be well advised to take the necessary steps to | | | | outstanding balance with an account is over 70 |
| increase your credit score, and there are many ways | | | | percent, this damages your credit score the most, |
| to do that. | | | | followed by the next tier of 50 percent of your credit |
| It is beneficial for you to become informed about how | | | | limit, followed by the lowest tier of about 30 percent of |
| the credit bureaus calculate the credit score that is | | | | your credit limit. Your best score comes from being |
| reported to a potential lender. Some of the things you | | | | between 0 and 25 percent of your credit limit, and of |
| should do may actually appear to be counter intuitive, | | | | course having a solid history of on time payments |
| but if you follow common wisdom to increase your | | | | where you pay at least the minimum amount due and |
| credit score, you actually may be doing more damage | | | | perhaps even 10 percent more. |
| than good. For example, closing credit card accounts is | | | | The credit scoring software also assumes that |
| not always in your best interests when it comes to | | | | consumers who have had credit for a long time are a |
| raising your credit score. | | | | lesser risk of defaulting on payments, which is why |
| If you want to increase your credit score, sit down | | | | you should keep an account open instead of closing it |
| with all your accounts and check the credit limit on | | | | when you have paid it off. |
| each of your accounts. If you are like most people, you | | | | Maybe you have some late payments listed on your |
| probably have multiple credit accounts with Visa, | | | | credit report as many people do. You may be able to |
| MasterCard, and Discover, perhaps also American | | | | work with the creditor if you have a recent history of |
| Express. Check your credit limits on each of these | | | | good payments and request a "good faith adjustment". |
| accounts and distribute your remaining balance as | | | | But be open and friendly, since people are more prone |
| evenly as possible over the accounts. Almost all credit | | | | to work with people who are friendly and genuine as |
| cards allow you to do a full or partial balance transfer | | | | opposed to people who are frustrated and rude. |
| from one card to another, and sometimes they offer | | | | If you have an account in collections, you need to get |
| interest incentives for doing so. If you can, pay off | | | | that paid off. But you should contact the collections |
| some of the accounts, but do not close the account | | | | agency and request that they delete the account upon |
| that you pay off. | | | | you paying the final balance. Not all collections agencies |
| As you are getting copies of your credit report, make | | | | will agree to this, but many will and it is certainly worth |
| sure that you get a copy of it separately from each of | | | | the effort to try. |
| the big three credit bureaus. Since the credit bureaus | | | | There are many more things you can do to increase |
| do not share information between them, your credit | | | | your credit score, but the key is to start as soon as |
| score is almost certainly different with each of the | | | | possible. It does not happen overnight, but it is certainly |
| credit bureaus, so be sure to get a copy from each of | | | | in your best interests to take these steps for the |
| them. | | | | benefit of your credit score. |