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The lending market is getting tougher. On the heels of the sub-prime market fallout, most lenders are implementing rules and policies that make it much tougher for people to get a loan approved. The end result of this is that if you anticipate wanting to get the best possible rates and terms on a future loan like a car loan, mortgage, or other big ticket items, you would be well advised to take the necessary steps to increase your credit score, and there are many ways to do that.

It is beneficial for you to become informed about how the credit bureaus calculate the credit score that is reported to a potential lender. Some of the things you should do may actually appear to be counter intuitive, but if you follow common wisdom to increase your credit score, you actually may be doing more damage than good. For example, closing credit card accounts is not always in your best interests when it comes to raising your credit score.

If you want to increase your credit score, sit down with all your accounts and check the credit limit on each of your accounts. If you are like most people, you probably have multiple credit accounts with Visa, MasterCard, and Discover, perhaps also American Express. Check your credit limits on each of these accounts and distribute your remaining balance as evenly as possible over the accounts. Almost all credit cards allow you to do a full or partial balance transfer from one card to another, and sometimes they offer interest incentives for doing so. If you can, pay off some of the accounts, but do not close the account that you pay off.

As you are getting copies of your credit report, make sure that you get a copy of it separately from each of the big three credit bureaus. Since the credit bureaus do not share information between them, your credit score is almost certainly different with each of the credit bureaus, so be sure to get a copy from each of them.

Make sure that your credit limit is being reported for each account. If an account is not reporting your credit limit, the system used by the credit bureau to calculate your credit score will assume that your account is maxed out, which is a negative when computing your credit score. You get a more favorable score as your outstanding balance is closer to zero. If your outstanding balance with an account is over 70 percent, this damages your credit score the most, followed by the next tier of 50 percent of your credit limit, followed by the lowest tier of about 30 percent of your credit limit. Your best score comes from being between 0 and 25 percent of your credit limit, and of course having a solid history of on time payments where you pay at least the minimum amount due and perhaps even 10 percent more.

The credit scoring software also assumes that consumers who have had credit for a long time are a lesser risk of defaulting on payments, which is why you should keep an account open instead of closing it when you have paid it off.

Maybe you have some late payments listed on your credit report as many people do. You may be able to work with the creditor if you have a recent history of good payments and request a "good faith adjustment". But be open and friendly, since people are more prone to work with people who are friendly and genuine as opposed to people who are frustrated and rude.

If you have an account in collections, you need to get that paid off. But you should contact the collections agency and request that they delete the account upon you paying the final balance. Not all collections agencies will agree to this, but many will and it is certainly worth the effort to try.

There are many more things you can do to increase your credit score, but the key is to start as soon as possible. It does not happen overnight, but it is certainly in your best interests to take these steps for the benefit of your credit score.

objavio/la debt.com  # 06:18