Their are credit card companies like Capitol One, for example, that will only report the high "used" credit, not the high "limit"...Why is this bad and how can it hurt you...Its bad because it doesnt give full picture of your credit worthiness or allow other possible vendors with better offers to know that you have certain credit limits already, you may have them, but never used them...The next problem is that one factor in determining a credit score is your balance:available(B:A) ratio...Most scoring algorithms favor a 30% or lower number on credit cards, for example...So, you could have a $3000 limit on your Cap One card but never charged more than $800 on it and maintain a $500 balance or so...Instead of showing as a very low B:A ratio, it shows a very high one actually lowering the score or at least not increasing it as much as it should...So, if you have cards like that, you may want to try and call them to see if they will update record, tell them why or go on a spending binge one month, run the limit up with your normals bills and pay off next month so as not to disrupt budget...This will now show a higher limit and lower balance!...
The easiest and most widely know credit improvement tip is to pay all of your bills on time. Paying all of your bills on time will help to not only maintain, but to increase your credit scores quickly and efficiently. Knowing which debts and credit liabilities report to your credit report each month can help you to make sure you are paying all of your bills on time and maximizing your credit score.
Be sure to review your credit report for inaccuracies. Many people have errors on their credit report that causes a lower score than they deserve. Disputing these inaccuracies could improve your credit.
When considering closing some of your accounts, you should know that older accounts help your credit score. When possible close newer accounts first. If a newer account has a lower interest rate or if you receive an offer for a card with a lower rate, contact the company with your older account. Tell them why you are considering closing your account and ask them to match the other companies rate and terms.
The kind of loans that hurt your credit score most is the "No payment for 2 years" type of loans for the following reasons.
(1) New loans hurt your credit score when first opened.
(2) Your balance is usually 100% of the available credit.
(3) There is not going to be any payment history for this loan for the next two years to bring up your credit score back.
Many furniture stores offer this type of loans. If you are shopping for furniture, wait until your home loan is funded first.
Sometimes people have low credit scores even when they pay all of their bills on time. This can be due to high balances on revolving credit such as credit cards. It is best to keep credit card balances below 50% of the available credit limit. It is better to keep it under 30% whenever possible.
Asking your credit card companies to increase your credit limits (only ask on cards which you pay on time) can help marginally, and if you are the forgetful type, think about enrolling in an automatic bill payment service.
If you have been told that you have a lack of credit depth, or not enough open account, yet do not have the credit available to open credit cards, secured credit cards can be a good start. With a secured credit card you take your money to a bank and deposit it into an account, so you are therefor borrowing against your own dollars and are not a liability to a bank or credit card company. Most cases, immediately upon opening the new account will drop your score by about 20 points, then slowly build back up over the next 6 months. Roughly 6 months after opening the new account, it will begin to positively raise your credit score if payments are on time.
A great way to make certain payments are on time is using automated payments. If you can maintain a sufficient balance in a checking account, most bills now a days that need to be paid can be automatically deducted from your checking account, therefor eliminating the need for paper bills that are easy to misplace and lose track of.