Are you saying, “I want to fix my credit so I can have a better credit score”?  Some people suggest that you reduce your credit cards to one or two that you use for regular purchases and your oldest one credit card, then, cancel the rest. This advice is often criticized, so I thought it’d be fair to dig into the issue in some detail.

Many people who disagree with this advice point out that one of the elements of a person’s credit score is the debt-to-credit ratio. In other words, the more cards you have, the higher your total credit limit is, and thus your debt-to-credit ratio is better.

From that perspective alone, then it is a bad idea to cancel your cards. But that pulls just one fact out of a big handful of facts. Let’s look at some more.

No one knows for sure how FICO (or other credit scores) work. FICO’s exact formula is a trade secret. They reveal “tips” on how to improve your score and have offered this as general guidance on what makes up your score:

1. Your Payment History (35% of your score)
2. The Amount of Credit You are Currently Using (30% of your score)
3. Your Credit History, or Length of Credit (15% of your score)
4. How Regularly Your Credit is Checked by Lenders (10% of your score)
5. The Different Types of Credit You Have (10% of your score)

What do each of those mean? It’s not clear - the best we can do is try to interpret them.

The types of credit used is a factor. If you have a lot of credit cards, you have a lot of sources of revolving credit, the worst kind. That hurts the portion of your score that evaluates the types of credit you’re holding.

Anecdotally, manual underwriters for home loans do not like to see lots of credit cards. When I applied for my home loan, I had two open credit cards - my oldest one and a general use one. The manual underwriter flat-out told me that such a status was a good thing because it showed consumer willpower and less risk that I’d be opening a lot of lines of credit. We ended up getting a very good rate on our home loan.

The more open credit cards you have, the greater the chance of identity theft. Identity theft is a serious concern, and the more open credit card numbers you have floating around at banks, the more likely you are to get bitten by an accident at a bank or unethical use of business records. While this is a small risk, if it does happen, it can be devastating.

A lot of available credit is a psychological temptation. It becomes much easier to just push the plastic and buy something if you have $15,000 in available credit on your cards. If you find it very easy to put purchases on your credit card and worry about the bills later, this is a real concern.

Find out exactly what I’m talking about by downloading your copy of the FICO® Formula.

Anyone who has tried to get a loan in the last fifteen years or even anyone who has tuned into basic cable in the last year and a half is at least familiar with the basic idea of a credit score: it’s a number that lenders use to determine what interest rate to give you on your loans. But how does it really work?

So, what is a credit score? A credit score is a single number that represents how trustworthy you are from the perspective of someone who would lend you money. If you haven’t proven yourself trustworthy, your credit score is low; on the other hand, if you repeatedly show yourself trustworthy (by paying bills on time and such), your credit score will be high.

Who determines a credit score? In the United States, a small number of companies, called “credit reporting agencies,” are in the business of collecting information about you. They do this by exchanging information with companies that offer financial items, such as loans, credit cards, and so forth. The agencies generally care about three things: the money you’ve borrowed, the amount you owe, and whether you’ve been making your payments. They collect this information from everyone you are indebted to and create a picture of how trustworthy you are in terms of credit. In the United States, the three main companies engaged in this business are Experian, Equifax, and TransUnion.

What makes up a credit score? There are five main elements to the credit score:

1. Your Payment History (35% of your score)
2. The Amount of Credit You are Currently Using (30% of your score)
3. Your Credit History, or Length of Credit (15% of your score)
4. How Regularly Your Credit is Checked by Lenders (10% of your score)
5. The Different Types of Credit You Have (10% of your score)

What can I do to fix my credit and make my credit score better?  The biggest thing you can do is pay down your debts, not open up new credit cards and such, and pay everything on time.  But to know exactly how to make your score better NOW just follow the step-by-step instructions in the #1 recommended FICO® Formula eBook.  To Your Success!

Did you know that 1 in 4 credit reports contain errors that are significant enough to affect your credit score in a negative way? That means that there is a good chance that a mistake that the credit bureaus made might be costing you thousands of dollars. That’s why it is so important to review your credit report on a regular basis.

What’s more interesting is that even if you have negative marks on your report that are in fact true, there are a handful of things you can do to instantly increase your credit rating. That’s because your rating is automatically assigned by a computer looking at your credit report. Fortunately for you, there are many ways to trick the system and instantly improve that score.

Now (if you’re saying, “I want to fix my credit“) you can do what credit counselors charge a fortune for completely on your own. By just taking a few simple steps that are guaranteed to increase your rating, you can get the loan you need at the rate you deserve.

The amazing thing is that it is that none of these strategies are difficult to do. Take the debit-to-credit ratio for example. Lenders like to see that you only use a small fraction of your credit, so if you simply increase the limit on your credit cards you’ll instantly increase your credit rating. It’s a simple as making one phone call!

There are several other quick fixes you can do to quickly improve your credit score, but you need to first understand how the FICO score is calculated.   To help get you there quicker, just follow the step-by-step instructions in the FICO® Formula eBook.  To Your Success!

If you discover a problem with your credit score and have been saying “I want to fix my credit“, don’t act without knowing exactly what to do. Doing things that seem like they might improve your credit, might actually damage your credit score. Before getting into the five mistakes you need to avoid, let’s look at what makes up a credit score, as defined by the fine folks at Fair Isaac:

The exact formula that makes up your credit score is a closely guarded secret.  Still, Fair Isaac has provided these components and the weighted impact of each (approximate):

1. Your Payment History (35% of your score)
2. The Amount of Credit You are Currently Using (30% of your score)
3. Your Credit History, or Length of Credit (15% of your score)
4. How Regularly Your Credit is Checked by Lenders (10% of your score)
5. The Different Types of Credit You Have (10% of your score)

Mistake #1: Cancelling old credit cards. 15% of your credit score comes from the length of your credit history. So, cancelling your oldest credit card can often be a mistake. Also, if you have balances on other cards, cancelling an old credit card can also worsen your debt ratio, which makes up 30% of your score.

Mistake #2: Having too many open lines of credit. 10% of your score comes from the types of credit used. If you have a lot of sources of revolving credit (i.e., credit cards), you can be seen as a credit risk because you have the potential of racking up a lot of debt very quickly.

Mistake #3: Maxing out your cards. 30% of your score comes from the ratio of your credit card debt and your credit limits. Thus, if all of your cards are maxed out, your credit score is suffering even if you’re keeping up with the payments.

Mistake #4: Requesting a credit limit reduction. Some people believe that they have too much credit and that they’re better off with a credit limit reduction. In fact, the only significant effect a limit reduction has on your credit score is a negative effect on your debt ratio.

Mistake #5: Declaring bankruptcy. Many people go forward with bankruptcy because they believe it’s the only way out. Instead of taking such a drastic measure, seek counseling first with one of the more legitimate sources mentioned above. Bankruptcy can really decimate your credit score for a very long time. Quite often, there are better solutions, such as negotiating with creditors and so forth.

Now that you know some of the things that will not help to improve your credit score, take the next step and learn all the secrets to truly improving your credit score: checkout the FICO® Formula.

Have you been saying, “I want to fix my credit“?  There are 5 big things that make up your credit score, and when you know how to manipulate them, you can make big improvements to your credit rating. Some have more weight than others, so you will want to focus those areas that will have the biggest effect to your score in the shortest amount of time. That way you can instantly get approved for the mortgage or auto loan that you need.

These five things, in order of importance, are:

1. Your Payment History (35% of your score)
2. The Amount of Credit You are Currently Using (30% of your score)
3. Your Credit History, or Length of Credit (15% of your score)
4. How Regularly Your Credit is Checked by Lenders (10% of your score)
5. The Different Types of Credit You Have (10% of your score)

These percentages are how these 5 factors weigh on a typical consumer. The exact percentages may slightly vary, but this is a pretty accurate generalization.

Based on this, the first thing you want to do to improve your credit score is to take some time working on your payment history. That doesn’t necessarily mean just paying your bills on time. If you made late payments in the past, there are steps you can take to have those mistakes erased from your credit report.

Another quick fix to improve your payment history is to open a secured credit line and use it to make small purchases. Even if you just charge $0.10 and pay the bill off in full each month, your credit rating will dramatically increase within 30 – 60 days.

That’s a long time, but there are other things you can do to immediately increase your score. Probably the most overlooked way boost your rating is to consider how much credit you are actually using. In other words, are you maxing out your credit cards or staying well below your available credit limit? By simply moving your available credit to outstanding debt ratio to around 25 percent, you can instantly increase your credit score. This, of course, takes using a few tricks of the trade to make it happen.

Find out exactly what I’m talking about by downloading your copy of the FICO® Formula.

Is the FICO® Formula eBook Worth It? An Honest Review…

If you need some help qualifying for a better rate on a loan or getting more credit, I just read what might just be the best resource for instantly increasing your credit score.  The FICO® Formula is jam packed with tips on how to beat the credit rating system and increase your score, no matter how good or bad it is.

The FICO® Formula!

I thought I knew all there was to increasing your credit rating, but this book just blew open all of the secrets. Now you can personally do everything a credit counselor does, but completely on your own!  The FICO® Formula can save you thousands of dollars on your mortgage, auto loan and credit card interest rates, and is a must have for everyone. Not only will it help you improve your rating, but it even includes strategies on how to fight back against credit collectors and win!

Full review coming soon…  For now, visit the FICO® Formula.

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For now, visit the Credit Secrets Bible™.

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For now, visit Credit Repair Secrets REVEALED.

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For now, visit the Attorney’s Credit Repair Guide.