The Fastest Credit Fix
January 23rd, 2009, Written By: admin
If you’re looking to purchase a new home, car, or other type of financing, you need a quick credit fix. Regardless if you have good credit or bad credit, there are a number of things you can do to increase your score.
While some of these methods may not have sustained, long-term results, it will help increase your rating now so you can quickly get the loan or financing your need.
The first thing you can do is improve your debt ratio. This is the amount of outstanding debt you have as it compares to the amount of available credit. Confused? Let me explain…
If you have a credit card with a $10,000 spending limit, and you have a $5,000 balance, that means you are carrying a 50% debt ratio. If you owe $7,500, you would have a 75% ratio. Basically the closer you are to maxing out your credit lines, the more it hurts your score. Lenders like to see that you have been extended a lot of credit and that you know how to manage it properly.
Statistically, people who are near their credit limit and at risk of maxing out their credit cards are likely to be late on their payments and default on their loans. For that reason, you score suffers when you use too much of your available credit.
Just by lowering this ratio, you can improve your score, and there are two ways to do this. The first is to pay off your balance – simple enough. The second is to re-distribute some of that debt. If you have another card with no outstanding balance on it, transfer some of that balance to the other card. That will reduce your debt ratio.
Another way to quickly increase your score is to make sure you have different types of credit. As mentioned above, lenders like to see your ability to manage credit. That means they want to see your experience in handling all different types of credit and loans.
In order to do that, you want to be sure you have both an installment loan and revolving credit. Revolving credit is like your credit card. Every month you “borrow” money by using your credit cards, and every month you receive a bill based upon how much you used and the balance you carry.
An installment loan is one where you obtain cash and have a fixed monthly payment plan, which can be 5, 10 or 30 years, for example. A car loan, a home mortgage, or even a bank personal loan are examples of this. So if you get a small personal loan from the bank, deposit the cash in a high-bearing interest savings or CD, and pay your bill on time every money, you’ll quickly boost your score.
The third quick credit fix is to closely look over all 3 of your credit reports. There’s a very good chance that these reports contain wrong information that is hurting your score. It is not uncommon to have late payments on things you were never late for, or an account marked open that should have been closed. Find these mistakes and get them fixed. By law the reporting agencies must investigate and repair the issue.
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Categories: Establish and Rebuild Credit
