Increase Your Credit Score

You will want to increase your credit score or fico as it is used as a criteria for credit approval by most major lenders and mortgage companies.  The fico credit score can range from a low of 300 to a high of 850 and is used to decide whether or not you qualify for mortgage loans, personal loans, lines of credit and credit cards. The higher the scale,  the better the risk is you are perceived to be by some credit grantors.

There are many myths about how to improve your credit score. Misinformation regarding the best ways to increase your credit score abound in financial circles. Incorrect information has been indiscriminately circulated by professionals in the financial industry and others in the business community.

The most popular myth today is the suggestion that borrowers close a number of their credit lines, credit cards etc to improve the ratio of debt load to available credit. Some lenders may suggest that you pay down or close some accounts prior to them issuing a new mortgage or loan to get your debt service ratios at an acceptable level, but this not something that should be done prior to consultation with the lending agency. Once these accounts have been opened, the damage is already done so to speak. The inquiries are recorded on your credit score immediately. To increase your credit score, just make sure you keep your accounts up to date and at an acceptable level.

One of several methods used by the credit bureaus to calculate your credit score is based on a balance between the credit currently in use and your total available credit. Once you close some of your credit lines then your balances show to be at higher limits in relation to unused available credit.

Another misconception is that when you check your own credit score it will reflect as an inquiry on your credit report and downgrade your fico score. While it is true that excessive credit queries can have a negative impact on your credit score, ordering your own credit report does not affect your fico score.

All three of the major credit bureaus adopt some form of fico score but different names are used to describe the process. It is always a good precautionary measure to check all three credit bureau records for any derogatory remarks and/or incorrect information contained in your credit file. Any untrue statements or notations can be removed by simply writing to the credit agency and documenting any discrepancies. The main reason for checking your records with all three agencies is that they do not usually exchange information and each of them could have conflicting statements in their files pertaining to your credit history.