Improving credit scores

How do you maintain a high credit score and quickly increase an existing score? Improving a credit score takes time, but there are some things you can do to change your score quickly. Your first step should be to talk to a professional mortgage lender who can help you obtain a copy of your credit report, understand it, and create plans for improving your scores if necessary. In the meantime, here are some ways to achieve the best possible score in both the long and short-run.

What does a credit score say? Research conducted by Fair, Isaac & Co. (FICO), identified indicators determining the probability a consumer will receive a 90-day late in the next twenty-four months. These factors are used to create your credit score (sometimes called your FICO).

Tips to improve your Credit Score

• Pay your bills on time (at least the minimum required payment). Some consumers think a mortgage late is "worse" than a credit card late. The FICO model doesn't distinguish between the two. A late payment is a late payment—-period. The consumer should make all payments on time. Late payments in the previous six-months reduce a credit score the most, followed by late payments in the previous seven to twenty-four months. Late payments over twenty-four months are the least damaging.
• The key to a good credit score is the ratio of outstanding debt-to-credit limit per card and overall. For example, a credit card with a $4,500 balance and a $5,000 limit is worse than a credit card with a $10,000 balance and a $15,000 limit. If you have several credit cards, it's better to spread debt among them to achieve an overall, low debt-to-credit limit ratio.
• A credit reporting company may not know the current limit on a credit card. They sometimes report a previous, highest outstanding balance as the credit limit. This could lower a credit score in some cases. Be sure they know what the credit card limits are.
• A credit card balance of zero will not contribute to a score. If a consumer has a good payment history for a card, make sure a balance for that card appears on the credit report.
• Length of Credit History: The length of time a card is open contributes to a score. Several credit cards open for a short time will lower a score, as will the sudden closure of credit cards or accounts (even if you are closing an otherwise unused account).
• Don't open several new credit card accounts in order to spread debt among them (in order to lower a debt/credit limit ratio). This will lower a credit score.
• Inquiries and applications for new credit. The number of inquiries into your credit history can reduce your scores, as can applications for new credit accounts.  Don't apply for credit accounts (even department store accounts) when you are preparing to apply for a mortgage.
• Generally, the inquiries one makes into one's own credit don't count (i.e. checking to review your own credit report). If a consumer is shopping for a mortgage and several inquiries have been made in the previous thirty days, only one mortgage inquiry is considered in the score. In the eleven months prior the previous thirty days, only inquiries occurring more than two weeks apart are considered.