Increase Your Credit Score by 20 Points
Ways to Boost Your FICO Score & Get the Best Interest Rate…
Even if you have a good credit score, there’s usually room for improvement. When times were good, most creditors didn’t look twice at applicant’s FICO scores. Now that we’ve seen this was a huge mistake, lenders aren’t making any mistakes when it comes to checking out a borrower’s ability to make payments on the loan.
Remember when a FICO score of 720 was good enough to get you the lowest rates on a loan, well those days are over. If you want to get the best terms on a loan today, you’re looking at a 740 or higher. This applies for both mortgage loans and car loans. Even a score of 700, which at one time was considered excellent, will now result in an interest rate of about 1.5 to 1.8 percentage points more than if you had a score of just 20 points higher.
Protect Your Credit Score and Your Good Name at the Same Time with LifeLock
So how can you go about getting those much needed extra 20 points? The first step is to go over your credit reports with a fine-tooth comb to make sure there aren’t any mishaps or mistakes. You can obtain your credit reports – Equifax®, TransUnion®, and Experian® from several web-based sources, including AnnualCreditReport.com.
Next you’ll want to lower the ratio of credit card related debt to your total amount of revolving credit. For example, if you owe $8,000 in credit cards and you can borrow as much as $40,000, your debt-to-credit ratio would be 20 percent. Industry experts say that it you can get this ration below 10 percent, you could see a significant increase in your FICO score. In fact, MyFICO.com suggested that a score of just under 710 could leap as much as 50 points or more.
Another way for you to go about boosting your credit score before a big purchase is to limit the use of your credit cards for three to five weeks prior. The reason is to keep the balances paid down so that it doesn’t appear that you are tapping into your credit. If making purchases, even if you pay off the balance at the end of the month, your credit card provider may not record the activity before a lender “pulls” your credit.
The final tip for increasing your credit score is to contact a credit card issuer or two and ask to have the limits raised on your existing accounts. By raising your credit limit, without raising your debt, you have helped to lower your debt-to-credit ratio even further.
Let’s take a quick look at what all of this hard work will get you. Let say you’re looking to buy a car. If your FICO score is 700 and you’re applying for a 48-month, $35,000 car loan, you can expect to pay interest in the range of 7.69 percent or $5,770. On the other hand, if you have a score of 720 and you’re given an interest rate on 6.11 percent, you’ll pay just $4,540 in interest for the same amount and term.
Related Information
9 Ways to Build Credit from Scratch
Improving Your FICO® Credit Score
4 Simple Ways To Improve Credit Score
Raise Credit Score Fast Quickly Free: Fico Beacon Scores
9 Ways To Raise Your Credit Score Immediately
No related posts. Click here for personal finance information.
Tags: AnnualCreditReport.com, Auto Loan, Credit Card Issuers, Credit Score, Debt-to-Credit Ratio, Equifax®, Experian®, FICO, Mortgage Loan, MyFICO.com, TransUnion®
 HomeBuyer Savings℠ Citizens Bank |
 Chase Sapphire℠ Chase Manhattan Bank |