It’s important to be “pro-active” with your credit. That is why we are going to teach you to do some things that will greatly enhance your credit card knowledge and help with increasing your credit score quickly. The principle of using your credit cards wisely includes using only 50% of your credit card limit. Let me explain why and what this does to your credit score.

Because the credit bureaus determine part of your credit score by how much credit you use, then keeping your credit score below the point of costing you points is where we want to teach you to be. That point is 45% debt to credit limit ratio or less. There are points that increase your credit score and points that lower your credit score. Some points to remember are this. Up to 14% debt to credit is the same as 0% used to the credit bureaus, plus or minus a few percent. Over 84% is the same as maxing out your credit cards and that is very costly in points on your credit report. Rule of Thumb – stay below 45% and or stay below 14% to keep your credit scores moving higher.

A trick to use if you need to use the capacity of your credit limit is to simply raise your credit limit. Call the number on the back of your credit card and talk nicely to the representative and say this… “Hello, I have a credit limit that is just too low for my needs, I would like to raise my credit limit, is that possible?” They will then ask you for your credit card number, verify that you are you and then check on your credit to see if you are worthy of raising your limit. This may work best after 4 months of being with Vantage Credit Alliance and the lawyers working to clean up items on your credit report or you have good credit at this point anyway. Then you will have the best chance of your credit card company saying “Yes… how much do you need?” That is when you say to them… “Oh, could you double it?” or if you have a business… “I need $40,000.” Or what ever you feel that your business may need.

Some businesses could use up to $100k or $200k. Don’t go overboard if you are not in control of your spending… otherwise… ask whatever you want. Now, they may not give you what you ask for but if they double what you already have, then you have instantly increased your credit score, because increasing your limit, just lowered your debt to credit ratio. AWESOME!!!

Here are the facts… when you refinance a loan, we are assuming it is an installment loan and not a revolving loan, because you don’t refinance a revolving loan unless you crashed it and it is closed and they just want their money back. This is a bad thing and just cost you a ton of points. I have seen a revolving loan closed because of bad payments cost up to a hundred points by scheduling a payment program to pay off the loan. So, we are talking only about refinancing installment loans. This will cost you 7 different ways because it will touch upon 7 different scoring “reason codes”.

Reason codes are the codes found on credit reports that a creditor pulls when you apply for credit and explain to them why they don’t want to let you apply for credit because these codes explain the problems associated with your credit report. Guess what, the credit bureaus get a credit fixmycreditsite.com don’t put these on your credit report. We are really curious why not, because it would be really helpful for you if they did. Perhaps they don’t want to help you get a good score? Hmmm… I have my own suspicions.

Ok, back to the problem at hand… refinancing installment loans. When you refinance an old loan into a new one, you have started with a hard inquiry (1), have now lost the history of the old loan (2) and at the same time created a new loan (3). There is no payment history (4) and the credit bureau doesn’t have enough information to calculate a score (5). It has a 100% debt to credit limit ratio (6) and increases your overall debt to credit limit ratio (7). All of these factors will cost your points and lower your credit scores.

When you refinance a loan there are several factors that you need to aware of before you make this devastating mistake… ok, it could be a great thing but you need to know the facts before you go and jump into a loan that could cost you a lot of points. Be sure the new loan is worth the cost of throwing away the old loan before proceeding. Calculate cost payoff. Cost payoff is what it will cost you to refinance versus what it will take in time and effort and money to save the cost of the refinance. For instance, your refinance will usually cost you 3% of the loan balance. (Note: costing more is gouging and costing less is a great lender.) That is in dollars and sense, but there is also the cost of time, frustration and the cost of points on your equifax beacon credit scores. All of these factored in will show a cost that needs to be recouped before the full effect of the refinance can take place. What will it cost in money, in time, in frustration, in points, in years to recoup?

So, you’ve got some loans and think you are pretty hot stuff. Well, if you try to max out those loans, you will find that the hot stuff just cooled dramatically and you now have a low score to prove it. The reason is that if you don’t control the loan balances, then you will cost yourself some serious points because you have to keep the loan balances in control. For revolving accounts don’t go over 45.91%. Keep it safe and stay below 45%. You have probably heard many “credit experts,” tell us to keep our balances below 50% and it sounds really good. But the credit bureaus have heard the experts also and to outsmart them, they dropped their ratio limit to 45.91% just to outguess them. Sneaky, but it is effective. Want to be on the insider scoop, then drop your credit balances that extra 5% and make some extra points on your credit score.

On installment accounts, getting your balances 20% below the original balance as quickly as possible will help to boost your credit scores as well. I know some people who get a car loan, house loan or personal loan and quickly pay off that first 20% to get the loan balance below 80% and see their credit scores jump up again. I can’t say how many points because it is always conditional on about 100 different pieces of information in your credit file that I have no way of knowing. But it will jump up, I assure you.