Want to know how to raise your credit score in ten minutes? Sure, you probably know the basics: pay your bills on time, pay down your debt, and avoid major financial disasters like bankruptcy or foreclosure.
But if you want to know how to raise your credit score fast, here’s a great tip: Check to make sure the credit bureaus are accurately reporting your credit limits.
Here is a dirty little secret about credit card companies: they often intentionally report inaccurate credit card limits to the credit-scoring bureaus. And sometimes, they don’t report your limit at all.
In either case, your credit score will suffer. Of the ten biggest credit score mistakes to avoid, failing to correct an inaccurate credit limit is a big one—nearly half of all consumers have a credit report that inaccurately reports at least one limit.
Your credit score will suffer if your credit limit is not reported, or if the credit card company is reporting it as lower than it actually is. In either case, your balance-to-limit ratio will appear higher than it actually is, and this will cause your score to erode.
A big part of the credit-scoring formula takes a look at something called a utilization rate. This utilization rate is your balance expressed as a percentage of your limit. So if your balance is $300 and your limit is $1000, your utilization rate is 30 percent. If your balance is $750 and your limit is $1000, your utilization rate is 75 percent.
The lower your utilization rate, the better your credit score will be. I always tell my clients to keep their utilization rates below 30 percent. Anything higher, and your score will suffer.
Let’s take a look at what happens if you credit card company inaccurately reports your credit limit. If your limit is $5000 and your balance is $500, your utilization rate would be only 10 percent. This should raise your credit score.
But not if the credit card company is inaccurately reporting your $5000 limit, instead telling the credit bureaus that your limit is only $1000. This means that the credit-scoring bureaus think you have a 50 percent utilization rate.
Want to know how to raise your credit score in ten minutes? Here are three easy steps:
1. Download your credit report from http://www.720ficoscore.com.
2. If you spot any inaccurately reported credit limits, contact the credit bureaus as well as your credit card companies and ask to have the limits corrected immediately.
3. Follow up by sending the letters found in 7 Steps to a 720 Credit Score.
Philip Tirone is the author of 7 Steps to a 720 Credit Score. Attend his complimentary teleseminar to learn more tricks about how to raise your credit score fast!