How to maximize your credit scores quickly, while we work on your credit reports.
To maximize your results we suggest you follow these guidelines:
Credit cards you currently have:
Look at your credit card limit; subtract 70% of the credit limit amount. Never charge greater than this amount. This will equal 30% of available credit.
Example $1,000 limit – 70% = $300.
Creditors report information to the credit bureaus every 30-90 days and in most cases in the middle of the month when most people have large balances. They do not report what you paid on the credit card balance, but what your current balance looks like in the middle of the month. Therefore never charge greater than 30% of the available credit limit to be safe. In this example only charge $300 on a $1,000 limit.
Note: Ideally, pay off your credit cards to a zero balance each month, and never charge greater than 30% of your available credit limit.
When paying down your credit card balances to zero or under 30% of the limit DO NOT close your credit cards when there is over 2 years of history on the account. This will cause you to lose all the good credit history you have built on that credit card. Instead keep the card open & only charge a $5-$10 purchase once every three to four months to keep the account active. Remember credit cards go "inactive" after 6 months
IF NO current active credit cards in the last 6 months:
If you do not have at least 2 active current credit cards you can do the following:
A. Contact a friend or relatives and have them place you on their credit card as an Authorized User. After this is done the account holder will receive a new credit card in your name. To ensure that their positive credit history ‘carbon copies’ on to your report the account holder must make a single charge of $5 on your new card. Once this is done the entire account history should report to your credit history within 90 days. Bingo! You have established credit history! Depending upon your length of credit history you may need to do this with multiple authorized user cards. 3 to 5 active credit cards are preferred on your report. Cards with 5 –10 years of credit history are preferred. The older the card is, the more valuable the history, resulting in a higher score increase.
This will make up 30% of your credit score.
B. If you cannot find a person to add you to their credit card, then immediately apply for 2 secured credit cards. Remember, once these new cards are opened, your score will drop for approximately 6-12 months. However, it is better to drop your score now than to wait, in most cases. If you do not have current active credit, it is difficult to raise a score even when removing negative credit. Remember, Total Debt makes up 30% of your credit score.
C. If you have open credit cards with zero balances that you have not charged on for more than 6 months, be sure to charge a small amount, such as $5, then immediately pay it off. Within 30 – 90 days, in most cases, your score will increase because the account has been actively used. Any credit card that has not been used for more than 6 months will typically lower the score.
Do not open new accounts unless you consult your Credit Line Client Manager first.
In most cases, opening a new account of any type will lower a score. Do not open an account unless absolutely necessary. Remember it will lower your score up to 6-12 months. Choose your accounts wisely.
Pay all your bills on time:
ANY new late payments, collections, charge offs, or bad debt of any type will lower your score as much as 107 points, even a new 30 day late payment of $5 can cost you the loan you want and your credit score. Pay your bills on time every time.
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