Apparently there is a way to increase your credit score and it is probably not what you think it is. When asked this question randomly at a college, most students reported that the way to increase you credit score was to pay off your bills every month and on time. Some home owners said that the way to do so was to pay your mortgage on time and try to remove bad references from your credit records.
It seemed that everyone claimed to have heard a trick or two. Others said that constantly querying the credit bureau and challenging them to respond to you within 30 days or as mandated by law would result in the credit agency messing up and the matter being cleared based on a technicality. Truthfully, enough people mentioned the latter, that it appears that this somewhat unorthodox method may have some validity in a few jurisdictions.
The underlying thought process that most people have when confronted with this question is pay your bills on time and your credit rating will be great. But is this really true? We are going to call this myth number 1. So, let's look at myth number 1. Loan institutions love people who pay off their bills on time every month. Ok, so I see huge bank profit in that model, right? If this were truly the case, how would a loan institution make any money? ha ha Loan institutions love people who maintain a balance that they can get charged interest on. And that's the truth.
Ok, myth-ism number 2. Banks and Loan Sharks love people who borrow as much as possible. Really? If this were the case, people who couldn't repay loans would get huge amounts of credit and constantly end up in repayment problems. Do I hear echoes of a well known mortgage problem in here? So perhaps this isn't 100% of the answer either.
Perhaps the answer lies somewhere in between. Loan institutions love clients who pay something on their bills each month ( preferably just the interest and a little more ) and whom appear to have the ongoing ability to manage/to pay down on the debt load. I.e. Fifty thousand in available personal credit, 22,000 used already.
The keyword phrase "ongoing ability to pay " is why some older retired persons with otherwise good credit may sometimes have difficulty refinancing longer term loans. Existing verifiable income is one of the underlying basis for credit that requires repayment. I think pension checks are income but for some reason lenders don't rate those quite so highly.
So the key issue for those looking to increase their credit scores from perhaps a low 600 to a high 800 depends more on the factor of debt ratio.Primary amongst those additional factors is as mentioned, the DEBT RATIO. If you want to have a credit score above 800 then the credit agencies must think you have a very favorable debt ratio.
The absolute best candidate is someone with a favorable credit to debt ratio, meaning they have room to increase their debt, and has shown the long term ability to handle an ongoing balance. Note that balance does not mean not necessarily paying it off every month.
Who then are the loan arrangers really searching for? That would be the gentle person with a credit to debt ratio which is not only low, meaning they have room to increase it, but someone who also has shown the long term ability to handle an ongoing balance. Come to the site and view the Credit Score Video then make a few quick changes to fix your score. Is 72 hours too long?
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Going for a loan , Mortgage or Lease. Increase your credit score first and get a better loan rate from your lender.
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