Quick Way to Raise Credit Scores

By
Mortgage and Lending with The Mortgage Experts at America's Mortgage, a Division of Cherry Creek Mortgage Co. NMLS #241555

When we run someone's credit through the software that tells us exactly what to do to raise their credit scores, the most common recommendation is to lower the percentage of the person's credit limit that is being used.   

Here are the percentages that affect credit scores:

  • If the balance is more than 70% of your credit limit, it lowers your score the most.
  • If the balance is 50% - 70% of your credit limit, it lowers your score a bit less.
  • If the balance is 30% - 50% of your credit limit, it lowers your score even less.
  • If the balance is below 30%, it will improve your score the most. 

These percentages apply to individual credit accounts and also to the total credit limit of all credit accounts.  So if you pay off a credit card account, do not close the account.  That will lower your total available credit limit and therefore lower your credit scores.

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mortgage tips
credit scores

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Rainmaker
266,329
Jack Mossman - The Nines Team in Stockton
The Nines Team At Keller Williams - Stockton, CA
The Nines Team at Keller Williams

Chris - thanks for this analysis - it will be helpful for many buyers, especially those trying to re-establish credit.  Helpful credit hints are always appreciated!

Sep 08, 2010 01:20 PM #1
Rainmaker
330,861
Mike McCann - Nebraska Land Broker
Mike McCann - Broker, - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Chris...I would like to ask you and your industry to work behind the scenes...maybe you are...to fix the fiasco we know as FICO.  Why is so much faith put into a system that has no checks and balances and is almost impossible for a person to defend themselves on?

Tell me the things that a person can do that helps their credit when the banks lower their credit limit...thus pushing their debt balance back above the preferred amount...or when they want to shop for new insurance and all four want to run a credit check and each inquiry lowers their FICO?

I could list many more things but you get the picture...it is a very broken onesided system.

Sep 08, 2010 01:23 PM #2
Rainmaker
72,634
Stefan West
West Realty - Murrieta, CA
Temecula-Murrieta-Menifee CA Real Estate

Thanks for the extra information. How long does it take for the credit agencies to update the score once a client lowers the balances into the  30% region?

Sep 08, 2010 01:36 PM #3
Rainmaker
124,783
Chris Thomas
The Mortgage Experts at America's Mortgage, a Division of Cherry Creek Mortgage Co. - Denver, CO

Jack - Glad to help out.

Mike - There's no question it seems like the deck is stacked against the consumer when it comes to credit scoring.

If someone gets their credit limit lowered, it will usually lower their score because it raises the utilization ratio.  I think the best thing to do is to be proactive and keep using all the accounts.  Banks don't like people to have lots of available credit that they aren't using, but they will typically not lower the limits if you do use the cards every month.  You don't need to charge a lot or even carry a balance.  A tank of gas will do the trick.  If someone doesn't have much available credit at all after the limits are lowered, then they should either apply for a new card or get a secured credit card.  As far as the re-pulling of credit goes, that has much less of an effect than most people think.  I personally have never seen anyone's credit drop by more than a few points because of credit pulls.  I think most people assume it was the credit pulls that lowered the score, but it was really something else.  Creditors are not required to report things at any particular time, so many times new info is on the report since the last pull.

Unfortunately, there is so much nonsense on the Internet regarding credit scores, many people make bad decisions based on erroneous information.

Stefan - The credit agencies (Experian, TransUnion, and Equifax) will update the scores immediately after the creditor reports any payments, but the creditors are under no obligation to report the payments at any particular time.  It could be a day, a month, 2 months - whatever is most convenient for the creditor.  However, a lender can order a rapid re-score and update the credit scores.  That usually doesn't take more than 3 days.  To do that, the lender will need documentation from the creditor showing that the balance has been lowered.  A consumer cannot order a rapid re-score themselves.  It must be done by whoever pulled the credit report in the first place.  The charge for the re-score is about $30 per bureau, per account.  If one account needs to be updated by all three bureaus, then it would cost about $90.  This can get expensive quickly, depending on the number of accounts that need to be updated, so it is only recommended when the scores need to be updated immediately.

Sep 08, 2010 07:37 PM #4
Rainmaker
639,430
Adam Malachi
RLO Millennium Real Estate and Mortgage. - Castle Rock, CO
QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Great post! Excellent information's on credits!

Thanks for sharing,

Adam

Sep 08, 2010 11:35 PM #5
Rainmaker
639,430
Adam Malachi
RLO Millennium Real Estate and Mortgage. - Castle Rock, CO
QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Great post! Excellent information's on credits!

Thanks for sharing,

Adam

Sep 08, 2010 11:35 PM #6
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Rainmaker
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Chris Thomas

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