Credit Score Enhancement TIPs

Note: These TIPs below are suggestions only, and may  not help in all circumstances.

  1. Rather than missing a credit card payment, at least make the minimum payment (SECU VISA minimum payment: the greater of 5% of balance due or $15). Schedule an automatic payment if you plan to be away for an extended period of time.

  2. Get rid of sub-prime "lenders of last resort" cards as soon as possible, as these can hurt your score. Finance companies that do not provide conditional sales contracts (i.e. Best Buy, furniture stores, etc.) are viewed as personal loans which can lower your score.  

  3. Don't just move debt around (paying car payment with credit card) as this can hurt your credit score. If you are carrying revolving balances, it is better to avoid concentration (reaching the limit  on any one card). In this case, balancing the capacity between cards may actually help your score.

  4. Financial institutions must report to the credit bureaus monthly. Paying down your card to improve capacity will not improve your score immediately.  Credit bureaus may not post the updated information for 30-60 days.

  5. Having too many credit cards will count against you (generally 5 or more). Close newer lines with lower limit capacities first, since credit history is also an important factor in your score. Offset the reduction in capacity by asking for limit increases from the sponsoring financial institution of your remaining cards. Having two cards is better than one in case of fraud, or the malfunction of a supplier network, magnetic strip or local card reader.

  6. Capacity is measured in percent rather than dollars. It is easier to keep a higher capacity in terms of percent available with a larger card dollar limit, but not critical. Students with $500 card limits can have the same score enhancement capacity as someone with a $50,000 card limit, by paying off their balance every month. Another capacity component used in credit scoring includes your installment debt (current balance compared with original loan balance).

  7. Each time you agree to have someone check your credit, your score will be pulled down approximately 3-5 points (ie. "too many inquiries"). Shopping for a home, auto, or personal loan over a 45-day time frame will only count as one inquiry since the bureau screens accordingly. Marketing inquiries (direct mail pieces) or pulling your personal credit does not affect your score.

  8. Pay off any recent history collection items that show up on your credit report.

  9. Carrying revolving balances is not required to build credit. Paying balances in full monthly maximizes your credit capacity and shows personal discipline, lowering credit risk. 

  10. If you have to choose which bill to pay late, choose the one that you have previously paid late. This will hurt your credit score, but less than if you were to have a history of multiple merchants you have paid late. It is always better to make a partial payment on time than to completely miss a payment.

  11. Check your credit FREE at least annually to verify that information posted on your credit report is authentic (since there are 3 credit bureaus, pull your FREE report from each different bureau on a 4 month cycle). If you require your FICO score, you will have to pay for this feature, usually less than $10, and this type of inquiry does not count against your credit score.

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