Your credit score is like a snap shot, just capturing a moment in time. When
one of the major credit bureaus “pulls” your score it is determining your
score by what is on your credit report at that instant. Creditors report your
activity and balances at different times during the month. Some credit
inquiries show up the moment they’re run, while others appear 30 or more l
days later. Your score can literally change from day to day, and even
minute to minute!
Here are the tricks that will help keep your scores as high as possible. Even
if you have derogatory items on your credit reports use these strategies to
maximize your credit scores.
Keep your credit card balances low:
Keep your balances low. The less you owe on your credit cards, the better
your credit scores will be. Keep all of your balances below 25% of your
credit limit. If you are carrying a high balance on one card and small
balances on others, try and spread your balances out between all of your
cards so that no individual card has a balance higher than 25% of its credit
For even better credit scores, pay your credit cards off monthly. It’s a great
feeling to have no debt, but it’s also important to use each of your credit
cards at least once every three months to keep the accounts active and
reporting to the credit bureaus. Even if you pay off your credit cards in full
each month, your credit report may show a balance on those cards. However
the total balance on your last statement is generally the amount that will
show on your credit report. So, time your payments accordingly so that
each monthly statement shows the balance you desire.
Ask for an Increase in your credit limit:
This is an easy way to reduce the ratio of your credit limit to your balance
(utilization ratio) and create a credit score increase. If you have been
paying as agreed for at least five to six months go ahead and ask for a credit
line increase! Keep in mind that the credit limit increase is for increasing
your credit scores — not to borrow against. The higher your credit limit and
the lower your balances the better off you will be.
Avoid obtaining new credit:
If you get a new mortgage or a new auto loan, your credit score will take a
hit! Experian, Equifax and TransUnion scoring models all factor in “new
credit” as a negative item, reducing your credit score. Fortunately this only
lasts for about six months until a positive re-payment track record is
established. As with your credit card accounts, the credit bureau’s
(Experian, TransUnion and Equifax) scoring models also look at the amount
you have borrowed against what you owe on your home mortgage and auto
loan. Loans that have been paid down overtime are a huge positive when it
comes to increasing credit scores. Making more than the minimum monthly
payments on these loans will quickly reduce your payoffs and boost your
Another pitfall of searching for new credit are the “credit inquiries” made by
potential lenders. Every time you apply for a loan, insurance policy, cell
phone service, employment and sometimes even medical care a credit
inquiry can be made on you that will appear on your credit report. Each
inquiry comes with a price — a small ding in your credit score. The more of
these you acquire the more it hurts your credit score. The good news here
is that the damage only lasts about three to six months. For those of you
shopping for a car or mortgage the damage from having several inquiries is
minimal if you end up making a purchase within thirty to sixty days of the
Have negative items removed from your credit report
If you have negative items on your credit report, fixing them is an easy way
to raise your credit score.
First, you need to review all three of your credit reports, one each from
Equifax, TransUnion and Experian see if you have any derogatory items.
Review them carefully for negative items and items that may not even be
yours! Eighty percent of credit reports have some type of error.