Credit Tip #1: Credit Card Debt Ratio
Where should your monthly credit card debt ratio be? Let's say that your credit card bills are at 80% of the total limits that you have. At minimum, try to get them below 50%. If you can afford to below 30%, if you can find the means, below 10% and ideally pay them off completely if your financial situation allows for it.
Bringing down your debt ratio can make a huge difference to your FICO score and save you tens to hundreds of thousands of dollars over your financial lifetime.
Credit Tip #2: Keep Your Card Active
Make sure that you use your credit cards at least every 6 months. If you don't use a credit card, the card becomes inactive with the credit bureaus. Inactive accounts do not help to lower your debt ratio and you will also loose the history of that credit card which will also lower your credit score.
You want to use your credit cards to keep them reporting as an active account even if you only use them minimally. You use the card to buy gas or a lunch and pay off the balance if you want to. Just make sure that you use it every 6 months so it reports to the credit bureaus and that it remains active.
Credit Tip #3: Don't Close Your Credit Card
Never close credit cards. It is one of the worst things you can do to your credit score. By closing a credit card account, you raise your debt ratio and lower the average age of your credit file. You want to make sure that your 15 year-old credit card sees if 16th, 17th and so on birthdays.
Credit Tip #4: Ask for Credit Limit Increases
You want to ask for credit limit increases every 6 months as long as you're not going to apply for a loan or a major purchase in the next month or so, unless your credit score is above 730. You don't want to ask for the increase if you're on the cusp of the score you need to get that great loan, because 9 out of 10 times when you ask for the credit limit increase, a creditor will pull an inquiry which usually dings you 5 points or less. But when you are building or rebuilding your credit, getting credit limit increases will lower your debt ratio by increasing your available credit. This will help to increase your FICO scores.
To learn more about how you can help increase your credit score, go to Dr. Alan Rosenthal's website at http://www.financialsolutionservices.com where you can find more great information on credit improvement. And, you are cordially invited to sign up for a FREE Credit Repair and Enhancement Workshop by visiting http://www.financialsolutionservices.com/upcomingevents.html . For additional information listen to one of Dr. Alan Rosenthal's credit talks at http://www.financialsolutionservices.com/credittalks.html
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