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7 Steps to Achieving the Highest Credit Scores Possible

Credit Optimization for Real Estate Acquisition

7 Steps to Achieving the Highest Credit Scores Possible

First Step: Keep a good debt to Credit Ratio… Having a good debt to credit ratio plays an important role in determining what is a good credit score. Do you know your ratio?

To find out your ratio add up all your credit card balances and then divide this number by the total of your credit card limits, if this number is higher than 30% you need to lower this ratio. The higher your ratio is the lower your credit score will be.

Fixing this ratio requires that you pay down your credit cards to lower this ratio so it’s less than 30%. Once you have done this your credit score should improve.

Step 2: Negative Reporting… Having negative comments can be the difference between good credit and poor credit. Comments like “pays on time” “always pay” rather than “pays late” or “sending to collections” can really affect your overall credit score.

The best fix is not to get any negative comments if you’re going to have to miss a payment call your card or loan provider and explain the situation; you will find that most are willing to work out a solution. If you do have a negative comment confirm that it’s not a mistake and get it to straighten out as soon as possible.

Step 3: Making Payments On Time…This is another factor that really affects your credit score easiest fix is paying your bills on time.  If you are having trouble making your payments on time try using direct withdrawal’s from your account, this is easy to set up with your bank and will ensure your payments are made on time. And naturally, if you want to know what is a good credit score you need to keep your payments up to date.

Step 4: Your Credit History Length. Another factor of having a good credit score is how long you have been using credit for. As your history increase so does your credit score.

If you’re fairly new to the credit game the first thing you need to do is keep your card accounts active. If you choose to close some of your older accounts it can reflect on your credit report and score. Try to limit the number of credit lines you have as each time you attempt to open one it may shorten your credit history.

Step 5: How Many Accounts You Have Open and Active. While having many accounts does affect your score, some have said the more accounts the better your credit score. This is true…if you can keep the accounts up to date. Also having a variety of accounts is beneficial and shows lenders that you’re not a bad risk.

While this may be true in most cases be careful because opening too many too fast may affect your credit score negatively.

Step 6: Credit Inquiries. When determining what is a good credit score we need to look at credit inquiries. The two inquiries are “soft” and “hard”. While soft inquiries don’t play much on your credit score and take place when a person or company checks your score. Hard inquiries are when a possible creditor checks to determine if you are eligible for their card or loan.

While a hard inquiry may affect your score it will usually not be by much and will return to normal in a few months. Having many hard inquiries over a short span of time will really affect your score. It’s recommended that you don’t apply for several accounts all at once.

You should have a good understanding of the 7 Steps to Achieving the Highest Credit Scores Possible.

Step 7: History of credit applications – If you have applied for a number of credit cards in a short span of time, lenders are apprehensive on the sudden surge of applications and may fear that you are overstraining financially

Summary:

  • Payment history – A history of making late payments can be viewed as a huge risk to creditors or lenders. This factor as the greatest effect on an individual’s credit score.
  • New to credit – Lenders usually look into credit history before lending and hence if you are new to credit and borrowing, there is not a lot of information for them to make a quick decision. You may need some time to build up your credit score.
  • Amount of debt – If you currently have maxed out all your credit cards, lenders worry that you will be unable to take on more credit and may decline on extending further credit unless the payments for the initial amounts are made.
  • A mix of accounts – A blend of various loans reveals to lenders that you are able to handle different types of credits such as credit cards and personal loans, for instance. However, if the only credit you hold is in the form of a credit card, you might be keeping your score from improving.

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