Thousands of dollars can be saved by
having good to excellent credit scores. A
good credit score by today's standards
would be 720 and above. A credit score of
760 is what to aim for if you want the
absolute best interest rates and terms.
The current "credit crunch" has resulted
in lending institutions reducing the
availability of credit, especially for those
with problem credit. Now is the time to
deal with any problem credit and raise
your scores. The following are tips to
improve and raise your credit scores.
having good to excellent credit scores. A
good credit score by today's standards
would be 720 and above. A credit score of
760 is what to aim for if you want the
absolute best interest rates and terms.
The current "credit crunch" has resulted
in lending institutions reducing the
availability of credit, especially for those
with problem credit. Now is the time to
deal with any problem credit and raise
your scores. The following are tips to
improve and raise your credit scores.
1. Authorized Buyer or Piggyback Credit
Becoming an authorized buyer also known as piggyback credit can be an instant way to boost
your credit scores. If you know someone who has a good credit history and score and is willing
to add you to their account, this can immediately raise your credit scores. There are also
companies that provide authorized buyer accounts for a fee. See Authorized Buyer Credit
2. Retain Old Credit
Maintaining older credit gives you a longer credit history. This is important because credit
history constitutes 15% of your overall credit score.
3. Decrease Your Credit Card Balance
Pay down your credit card and decrease your balance to thirty percent (30%) or less than your
credit limit. Your credit score will increase. The great thing about this technique is that it works
whether it is a $5000 limit credit card or a $500 limit credit card, your credit scores will instantly
improve.
4. Payment Reporting Bill Credit (PRBC Credit Report)
(“PRBC”) is a national consumer reporting agency and credit bureau which has been around
since 2002. PRBC collects, stores and reports bill payment information according to the Fair
Credit Reporting Act. It gives the consumer and small businesses a way to build a credit file to
demonstrate creditworthiness. PRBC produces a PRBC Report and Bill Payment Score that
can be used to supplement your Experian, Equifax and Transunion credit reports.
Read more about PRBC credit reports
5. Get a Credit Line Increase
In the alternative, if you do not have the cash on hand to pay down your credit card account,
request a credit line increase but don't spend it! Many credit card issuers can increase your
limit without running a credit report. Make sure you inquire before you request the credit line
increase if you do not want to create inquiries.
6. Balance Transfer
Do not transfer all your balances to one low interest rate card. You may get many offers for the
best credit cards with low and even zero percent interest rates, but if you transfer all of your
balances to the one card then you run the risk of increasing your balance to limit ratio. A high
balance to limit ratio lowers your credit scores. You should always maintain a balance less than
thirty percent of your credit limit in order to have good scores. (Amount Owed is 30% of credit
score)
7. Apply for Easy Credit
There are many companies that do not require strict credit guidelines. These companies
extend credit to consumers with little to no credit history and less than perfect credit.
See Add Positive Credit
8. Get a Bank Loan Secured by a Savings Account
Bank loans weigh heavily on credit reports. A bank loan will increase your credit scores. A
secured bank loan will have the same effect as an unsecured bank loan, as long as it reports
to all three major credit reporting agencies. Read more about Secured Bank Loans
9. Get a Secured Credit Card
Secured credit is a good option for those who cannot qualify for regular credit. Not only will you
have the benefits of a regular credit card but you will also get an opportunity down the line to
convert that secured credit card into a regular one. Learn more about secured credit and
which secured cards to avoid. See Add Secured Credit Accounts
10. Limit Hard inquiries
Hard inquiries can take up to five (5) points off your credit score. Applying for new credit will
lower your credit score. Keep inquiries at a minimum. Additionally, any company that pulls your
credit report without your authorization is in violation of the Fair Credit Reporting Act which
allows only authorized inquiries to appear on your credit report. According to FCRA rules you
are entitled to $1,000 for each unauthorized hard inquiry. (New Credit Applications is 10% of
your credit score). See Erasing Inquiries
11. Know the Information reported by Credit Card Issuers Make sure your credit
card companies report your limit and balance. Some may only report your balance and not
your credit limit. Lenders who engage in this practice may actually be causing your credit
scores to be lower.
The scoring system will plug in your highest balance as your credit limit and if you are currently
at a high balance this can be detrimental to your scores. Capital One was notorious for this
practice; however, in August 2007 they changed their policy and will be reporting credit limits.
This means many consumers who hold a Capital One credit card may see a boost in their
credit scores.
12. Pay Obligations by the Due Date
Pay your obligations by the due date. A late or missed payment can
drop a good credit score by as much as 80 points or more. It may not make sense but if you
already have negative entries on your credit report adding more will not hurt you as much as if
you don’t have any negative entries. Regardless, paying on time can raise your credit score.
(Payment History is 35% of your credit score) Read more how important it is to pay bills on time.
13. Zero Balances may Hurt Your Credit Score
Strange but true. If you have many credit card accounts with zero balances your credit score
may be lower. Credit scores can be raised by maintaining a small balance (at least $10) on
your credit cards.
14. Keep Balances to Thirty Percent (30%) of Credit Limit
Do not use over thirty percent (30%) of your available credit. Keep those balances low and
your credit scores will rise. Definitely do not go over your credit limit. This hurts your credit
score tremendously.
15. Request a Deletion for Settled Negative Debts
If you pay a collection or settle a debt make sure you obtain a deletion and not a “paid
collection” entry. This also applies to paying a debt directly to the creditor. Paid collection
entries do not raise your score. See Deletions
16. Rehabilitating Past-Due Accounts
If you are past due on a credit card or loan some lenders will allow you to rehabilitate your
account. Rehabilitation is a process by which lenders erase negative marks from your credit
reports once a series of on-time payments have been made consecutively. Usually lenders
require at least 6 to 9 consecutive on-time payments in order for the negative marks to be
deleted. Rehabilitation is not something lenders generally offer, you will definitely have to
request it.
Becoming an authorized buyer also known as piggyback credit can be an instant way to boost
your credit scores. If you know someone who has a good credit history and score and is willing
to add you to their account, this can immediately raise your credit scores. There are also
companies that provide authorized buyer accounts for a fee. See Authorized Buyer Credit
2. Retain Old Credit
Maintaining older credit gives you a longer credit history. This is important because credit
history constitutes 15% of your overall credit score.
3. Decrease Your Credit Card Balance
Pay down your credit card and decrease your balance to thirty percent (30%) or less than your
credit limit. Your credit score will increase. The great thing about this technique is that it works
whether it is a $5000 limit credit card or a $500 limit credit card, your credit scores will instantly
improve.
4. Payment Reporting Bill Credit (PRBC Credit Report)
(“PRBC”) is a national consumer reporting agency and credit bureau which has been around
since 2002. PRBC collects, stores and reports bill payment information according to the Fair
Credit Reporting Act. It gives the consumer and small businesses a way to build a credit file to
demonstrate creditworthiness. PRBC produces a PRBC Report and Bill Payment Score that
can be used to supplement your Experian, Equifax and Transunion credit reports.
Read more about PRBC credit reports
5. Get a Credit Line Increase
In the alternative, if you do not have the cash on hand to pay down your credit card account,
request a credit line increase but don't spend it! Many credit card issuers can increase your
limit without running a credit report. Make sure you inquire before you request the credit line
increase if you do not want to create inquiries.
6. Balance Transfer
Do not transfer all your balances to one low interest rate card. You may get many offers for the
best credit cards with low and even zero percent interest rates, but if you transfer all of your
balances to the one card then you run the risk of increasing your balance to limit ratio. A high
balance to limit ratio lowers your credit scores. You should always maintain a balance less than
thirty percent of your credit limit in order to have good scores. (Amount Owed is 30% of credit
score)
7. Apply for Easy Credit
There are many companies that do not require strict credit guidelines. These companies
extend credit to consumers with little to no credit history and less than perfect credit.
See Add Positive Credit
8. Get a Bank Loan Secured by a Savings Account
Bank loans weigh heavily on credit reports. A bank loan will increase your credit scores. A
secured bank loan will have the same effect as an unsecured bank loan, as long as it reports
to all three major credit reporting agencies. Read more about Secured Bank Loans
9. Get a Secured Credit Card
Secured credit is a good option for those who cannot qualify for regular credit. Not only will you
have the benefits of a regular credit card but you will also get an opportunity down the line to
convert that secured credit card into a regular one. Learn more about secured credit and
which secured cards to avoid. See Add Secured Credit Accounts
10. Limit Hard inquiries
Hard inquiries can take up to five (5) points off your credit score. Applying for new credit will
lower your credit score. Keep inquiries at a minimum. Additionally, any company that pulls your
credit report without your authorization is in violation of the Fair Credit Reporting Act which
allows only authorized inquiries to appear on your credit report. According to FCRA rules you
are entitled to $1,000 for each unauthorized hard inquiry. (New Credit Applications is 10% of
your credit score). See Erasing Inquiries
11. Know the Information reported by Credit Card Issuers Make sure your credit
card companies report your limit and balance. Some may only report your balance and not
your credit limit. Lenders who engage in this practice may actually be causing your credit
scores to be lower.
The scoring system will plug in your highest balance as your credit limit and if you are currently
at a high balance this can be detrimental to your scores. Capital One was notorious for this
practice; however, in August 2007 they changed their policy and will be reporting credit limits.
This means many consumers who hold a Capital One credit card may see a boost in their
credit scores.
12. Pay Obligations by the Due Date
Pay your obligations by the due date. A late or missed payment can
drop a good credit score by as much as 80 points or more. It may not make sense but if you
already have negative entries on your credit report adding more will not hurt you as much as if
you don’t have any negative entries. Regardless, paying on time can raise your credit score.
(Payment History is 35% of your credit score) Read more how important it is to pay bills on time.
13. Zero Balances may Hurt Your Credit Score
Strange but true. If you have many credit card accounts with zero balances your credit score
may be lower. Credit scores can be raised by maintaining a small balance (at least $10) on
your credit cards.
14. Keep Balances to Thirty Percent (30%) of Credit Limit
Do not use over thirty percent (30%) of your available credit. Keep those balances low and
your credit scores will rise. Definitely do not go over your credit limit. This hurts your credit
score tremendously.
15. Request a Deletion for Settled Negative Debts
If you pay a collection or settle a debt make sure you obtain a deletion and not a “paid
collection” entry. This also applies to paying a debt directly to the creditor. Paid collection
entries do not raise your score. See Deletions
16. Rehabilitating Past-Due Accounts
If you are past due on a credit card or loan some lenders will allow you to rehabilitate your
account. Rehabilitation is a process by which lenders erase negative marks from your credit
reports once a series of on-time payments have been made consecutively. Usually lenders
require at least 6 to 9 consecutive on-time payments in order for the negative marks to be
deleted. Rehabilitation is not something lenders generally offer, you will definitely have to
request it.
16 Tips to Rebuild Credit History and
Improve Credit Scores
by Lisa Phillips
last updated: September 2008
Improve Credit Scores
by Lisa Phillips
last updated: September 2008
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