Three Hot Tips to Add 25 Points to Your Credit Score within 30 Days

If refinancing your existing home loan is in your future, you owe it to yourself and your wallet to do everything in your power to squeeze every possible point out of your credit score. By doing this, not only do you increase the likelihood that you’ll get the loan you want, but that you’ll get the repayment terms that will be most beneficial to your budget. Here are three simple techniques you can use to add up to 25 points to your credit score in about a month.

Department Store Credit Card — Do you have a department store credit card? A lot of people are carrying around department store credit cards that they don’t use simply because they were given the opportunity to save 10% off of a $50-$100 in-store purchase. You may have saved $5-$10 at the time, but that decision could wind up costing you thousands in higher borrowing costs. The reason for this is because a lot of people have a wallet full of department store cards that they don’t even use that are taking up space and tying up their credit. Whether you’re using an account or not, simply being open is enough to hurt your credit score because you have the potential to access that credit. Lenders are going to assume that you could access those funds; consequently, that will be taken into consideration when you apply for additional credit. If you have one (or more), I suggest you not only cut the card into tiny pieces, but let the department store know that you wish to close the account as well. This way you can ensure that your credit report accurately reflects your current information. If you don’t have one, don’t fall for an instant savings coupon just to save a buck; it could cost you a whole lot more in the long run.

Hitchhiking off of Someone Else’s Credit – How long have you had credit? If your recent credit history is somewhat spotty or your credit report has taken a few hits, you can improve your credit rating by a few points by being added as an authorized user to the credit card of a family member. For example, if your spouse or even a parent has a credit card which they have maintained in good standing with a great payment history for a long time, ask them if they will add you to their account as an authorized user. If they’re a little nervous about doing this, explain to them that you don’t need physical access to the account, just the additional points that will go on to your credit report. The reason this technique works is because the algorithm that is used in determining your overall credit score looks at how long you have been utilizing credit. By increasing the overall length of time you’ve been utilizing credit, you can add a few additional points to your credit score.

Credit Utilization — What does your credit utilization look like? The powers that be have decided that the best utilization of credit card debt lies somewhere in the vicinity of 25% of total credit available. For instance, if you have a Visa card with a credit limit of $3,000, you should owe no more than $750 on the card. Look at all of your credit card accounts individually and simply do the math. If you discover accounts that are over-utilized (more than 25%), there are two ways of fixing the problem. If you have cash sitting in the bank, you can simply pay down any accounts that are over-utilized. If cash isn’t an option, you can also shift balances between cards to improve your utilization numbers. For example, if you have a MasterCard account with a zero balance and a Visa card on which you’re carrying a balance of $1200 (with a credit limit of $1800), it’s obvious that you are over-utilizing the available credit on your Visa card. Either pay the balance on your Visa card down by $750 or transfer $750 or more of that balance to the MasterCard account, being careful not to put more than 25% of its available credit on a card. Depending on your credit card company, you may pay a nominal balance transfer fee for the privilege of moving the balance from one card to another. However, doing this will improve your credit utilization numbers and can potentially save you thousands of dollars in unnecessary finance charges in the form of higher interest rates on your refinance loan.

If you’re going to be refinancing your home in the near future, you’ll want to get started right away on these credit improvement strategies. It can take 30 to 45 days for the changes to take affect and for the anticipated credit score bounce to take place. However, it doesn’t hurt to get as much bounce added to your credit score as you can, especially if it will save you money when refinancing your home loan. It’s your money, so do everything you can to keep as much of it in your pocket as you can.

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