Having that said, the most important is how you manage and use your credit responsibly. You should never be late to pay your credit card bill. Use the online payment option to manage and set your bill payment automatically. Always spend less than you earn. For this, you need a budget that you should follow strictly.
Now we get to the fun part, where I’ll teach you the magic number credit agencies really want you to carry in debt and why.
Your FICO credit score is calculated using the following formula:
35 percent payment history
30 percent amount owed
15 percent length of history
10 percent new credit
10 percent types of credit
This means the bulk of your credit score is made up of on-time payments and how much available credit you have. Obviously paying your bills on time will improve your credit history over time, so we’ll focus on the debt to credit ratio.
Pro tips: This is a super-effective way to maintain a low balance on each credit card. These single credit score hacks can give your score a tremendous boost that is already been proven. Many experts will tell you to stick to 30 percent of your available credit. This means if you have $1000 of credit, you should only have balances totaling $300.The truth is the more available credit you have, the better your score will be. Maintaining low balances on credit cards can raise your score by up to 100 points.
I recommend keeping your available credit at 94 percent. So does Experian. I checked my own credit report one day and that’s the advice they gave me to raise my own credit score. You should only be spending $6 for every $100 of available credit you have to successfully raise your credit to the best possible score.
What this shows creditors is that if something bad happens in your life (medical emergency, job loss, etc.), you still have access to funds to pay your bills for the next six months. This lowers your credit risk and makes you someone lenders love to work with.
Only spending six percent of your available credit makes it difficult to gain credit increases from your credit card companies. Because they’re not going to raise your limits on a card you never use.
So, I use this credit score hack to boost my credit scores into the stratosphere. And also you can have massive success with it too!
What I do is charge and maintain a high balance on each card for two months. In the third month, I pay it all off and let it sit for two months. This way, I’m using my credit card enough for the bank. So the bank also continues raising my limit (thus raising my available credit). And at the same time, I am maintaining enough available credit to keep the credit agencies happy.
Master this method, and you’ll notice your score go within months. And there are a few more insider loopholes to instantly transform your life. All these tricks have the tremendous potential to increase your credit score that is already been proven.
One trick to boost the credit utilization piece of your score without really having to change your spending behavior is to pay your bill approximately 10 days before your due date.
Credit Utilization Formula: Credit Used / Total Credit
Just one late payment that happened years ago, maybe when you were back in college, could significantly impact your score today. Therefore one trick to absorb some of the impacts of a negative on your Credit History is to use Credit Bumpers by adding more Accounts to your total number of Open Accounts. This example shows how much faster you recover from one late payment when you have 5 open accounts instead of just one.
Credit History Formula: On-Time Payments / Total Number of Payments
Next life hack to boost credit score – Removing a collection account will usually boost your credit score
It’s always good to stay on top of all three credit reporting agencies. When you contact a collector for settlement, you should try to agree with them to a “payment for deletion”. There is a good chance these credit score hacks will help to boost your score. You have to check whether you paid the collection or remove the collection account, in both cases how many point you can earn.
In this regard you have two options: 1) A mortgage company can pull your credit in the last 30 days and they can run such simulation. or 2) you can sign up in a three bureau-monitoring site for www.privacyguard.com and run the analysis.
These scores are consumer scores, not the FICO score but it helps you to decide which collection(s) should you try to pay or delete based on the potential score improvement. Of course, there may be another reason to pay for a collection. But if you are looking for score improvement, follow the instruction above or call us – we always use these tools. Not all agencies will agree to pay for deletion.
A creditor will charge off your account after 180 days of no payments when you do not pay anything to debt. A charge-off has a highly negative impact on your score. It stays on your report for 7 years from the date it missed the payments.
The creditor often uses a third-party debt collector to attempt to collect payment after an account has been charged off. The original creditor may hold the account but assign it to a third party for collection.
In this case, the original charge off with the balance will be reported. However, a new collection account will report to your credit file if the creditor sells the debt.
Now you have two major negative items on the same debt, a charge-off, and a collection. It is a good idea to solve the problem with the original creditor before they sell the debt and the collection account shows up. The first collection can cost you 100 points negative if your credit score is in the 700s.
If you have lower scores and other negatives. Then the new collection has less effect on your credit score. But it is still significant. So it’s a good idea to take care of things that affect the credit score. Since FICO, algorithms are extremely complex and the details of how they work are kept highly secret, we cannot describe exactly how many points your score will drop due to a charge-off or a collection. All these credit hacks are proven to work for others and they work for you also. Do comments and let me do which one trick you are applying first to boost your score.
Related: Credit Repair Loopholes – Fix Your Credit
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