Credit Cards - How To Improve Your FICO ScoreAs Morgan Brown points out on BlownMortgage - recent events have lead to what many are calling the Death of Credit. This of course meaning that the products most home owners would typically use to buy real estate are no longer being offered, or face changes that require much more cash in hand before being able to use them.

It’s always been very important to have a good credit score. Perception is reality in the business world and your credit score is perceived as your value as a person in most cases. Everything from employment to insurance can now be affected by a bad score.

So what can you do for a quick boost?

Well Emily Davidson suggests some debt ratio reorganization for a quick boost:

One of the most important credit score factors is your credit card debt-to-credit limit ratio (aka debt utilization ratio). Keeping your credit card balances below 10% of your credit limit can do wonders for your credit score. Inversely, having higher balances can really hurt your credit scores.

Here’s a few key points to consider about debt utilization (watch out, it’s about to get geeky):

  • The ratio of total credit card debts to total credit limits is most crucial for your score. For example, if you used $4,500 in debt across 4 cards and had a total credit limit of $15,000, you would have a 30% debt-to-limit ratio.
  • Keeping this ratio low, ideally below 10%, will help earn you the most credit score value in this category.
  • Your credit card debts are calculated from the “statement balance.” So you could be receiving credit debt damage even if you pay your credit card bill in full each month.

But as you begin to analyze your card ratios and credit accounts, keep in mind that you should not close out unused or older credit card accounts. The reason for this is that there are a few things that make up a credit score and one of them is length of time an account has been opened. You can always make more money, pay off debt, but the one thing you cannot do is control how long an account has been opened. Even if timely payments were not made on it, it can still be a useful ace up your sleeve!

Three Tips To Quickly Enhance Your Credit Score

Next time the credit scores are re-evaluated by the bureaus, if you’ve done the steps below that Emily recommends, you’ll likely find a welcome change to your credit score.

  • If you are carrying large debts, pay them off.
    A $5,000 credit card debt from your vacation in April could be bringing down your credit score today. Paying off credit card debts is good for your credit score and your budget.
  • Control your credit card spending.
    Try to never charge more than 10% of your credit limit on your credit cards. For a $10,000 limit, this is $1,000. If you do charge over this line, you might want to pay it down before your credit card goes to “statement.”
  • Increase your credit limits.
    This is where the “15 seconds” comes in. I went online today to increase a credit limit I have with American Express card. The online form only asked for my requested increase amount and my monthly income. One quick click, and I had nearly doubled my credit limit for that card. My good customer record made this process a snap. Not all requests are this easy though, check to make sure the credit card issuer will not pull your credit with a hard inquiry before you request a credit limit increase.

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