How To Increase Credit Score - 5 Important Tips On How To Increase Credit Score And Keep It High

By Terry Pice

Credit score is like health - most people don't think about it until it becomes a problem. Just as the current state of your health mirrors the health habits you have followed over a longer period of time, so your credit score reflects your credit history. It means that building a high credit score takes time (although there are some shortcuts) and maintaining it is a continuous process. In this article, you'll find 5 ways to increase credit score and ensure you get good interest rates whenever you need credit.

Before talking about the details on how to increase credit score, there are some basics you need to know. Credit score, or FICO score (the most commonly used credit score, created by the Fair Isaac Corp.), is a number ranging from 300 to 850 which is calculated with a mathematical model, using the information in your credit report. The number shows the lender the likelihood of you paying back the loan on time. The higher the score, the less risky it is for the lender to give you a loan and the better interest rate you are offered. If your credit score is 700 and above, you’re likely to get the best interest rates available. A bad credit score not only may cost you thousands of dollars in high interest rates – if your credit score is in a really bad shape (e.g. below 500), you may not qualify for a loan at all.

To sum up – in order to get credit and good interest rates, you need to have a high credit score! Below you can read 5 important tips on how to increase credit score and keep it high.

1. Pay your bills on time. That’s the first advice you’ll get when you’re looking for ways to increase credit score. This tip seems really simple and obvious, but still many people underestimate its importance. What lenders want to know the most is if and how timely you have paid your bills in the past. That’s why 35% of the credit score is based on your credit history. Delinquent payments and collections can severely damage your score. The more recent your payment problems are, the worse. So, in order to increase your credit score, start paying bills on time right now, and your score may already be higher after a month.

2. Keep your credit card balances low. High outstanding debt may reduce your score. If you max out your credit cards, your score may be lowered even by 70 points. Instead of having one card close to being maxed out, transfer the balance from this card to a few other cards, so you can keep your credit card balances at or below 25% of your credit limits. Paying off debt is even a better way to increase credit score, so if possible, do this, but…

3. Don’t close paid-off accounts! Closing old accounts reduces your total available credit, which in turn changes your utilization ratio (the amount of your total debt divided by your total available credit). This may lower your score. Shutting down your oldest credit accounts shortens your credit history, which also makes you seem less credit worthy, therefore your score can drop.

4. Get a small loan. In order to qualify for a bigger loan (e.g. mortgage loan) in the future, you have to establish a credit history. If you have little or no credit score, and you prefer to avoid credit cards, acquiring debt is a quick way to start raising your credit score. After all – if you have no debt, how can you show the potential lenders that you are a good borrower, who pays the bills on time? Of course, you have to use this method of building credit score wisely – excessive debt load and a bunch of small loans may backfire.

5. Do your interest shopping within two-week periods. Each time you apply for a loan and the lender accesses your credit report, your credit score is lowered by 3 points. When trying to find the best interest rate for a loan, keep your loan processes within a focused period of time. This way, all your credit report inquiries are accumulated and will be treated as one single request, when your credit score is calculated.

These are five important things you have to consider if you want to increase credit score and maintain it. Although these methods are substantial in helping to achieve your goal, there are lots of additional tricks to discover…

The author of this article, Terry Pice is a financial expert and business consultant.

Click here now to learn more about how to increase credit score.

Tampa Mortgage Refinancing is Looking Up

By Richard Hadermann

Tampa Mortgage refinance and purchasing prospects should find themselves in a good situation in 2007 as consumers that may want to refinance could find themselves getting out of their current risky adjustable loan and getting themselves into a fixed loan program had a fairly reasonably-low interest rate. Richard Hadermann is a contributing editor for the mortgageobserver.net and has been evaluating the Tampa Mortgage market as well as housing on a national basis for the past five years.

My positive prediction is that housing in 2007 should rebound a bit from last year. The overwhelming general view is that the U.S economy is embracing for a soft landing. Although there are still many uncertainties that will obviously affect the overall outlook for the year such as inflation, energy prices, a currency crisis, etc... the housing market is probably the main downside risk to the economy. I was updating the mortgageobserver.net website the other day and I had to stop and think for a second that the worst really may be over for us as far as the downward turn in housing prices over the past year.

Richard Hadermann wrote some figures down to get an idea of the total number of houses for sale ( existing and new ) as a percent of total owner occupied units. In 2006 there was an estimated 3 million existing homes and 0.50 million new homes were for sale. These estimates might be off a little. If cancellations are included in the new home inventory, there are probably close to 0.65 million new homes for sale. These figures are very conservative so my guess is that 2007 will start off with a record number of houses for sale. The Tampa mortgage market will start off with an exceptional amount of housing inventory and hopefully by June or July should start balancing out a bit.

A recent email to mortgageobserver.net indicated that many consumers are dedicating a huge majority of there income to mortgage obligations. I agree that the homeowner with an adjustable loan that has recently ballooned may possibly be seeing an increase in their monthly mortgage obligations and the important aspect of the series of changes in debt service obligations is that even with historically low interest rates, many households are dedicating a record portion of their income to mortgage obligations.

The Fed recently reported that homeowner equity fell to a record low 53 percent compared to 54 percent from one year ago. In my opinion, this means that more homeowners have maxed out their "home ATM" One of the big concerns that I have is how the economy will be affected in the case of possible job lay-offs. Many industry analysts seem to believe that residential construction jobs may suffer in 2007.

In certain markets across the country, foreclosure rates may possibly be higher than normal opposed to other parts of the country. There are certain areas that were more accustomed for the "sub-prime"loan with no money down and the losses from these risky loans are already being felt in many markets.

Many industry wide experts are predicting that house prices will continue to decline in 2007. They believe that due to the record inventory and the impending foreclosures will put pressure on house prices in 2007. I have to appreciate their forecasts as this does fit historical pattern. Many mortgage insiders say that typically the second year of a housing bust is when prices start to fall. Usually busts are local due to a factory or big corporation folding but since the housing boom was national, many insiders of course feel that the bust will be widespread. The reason that these insiders believe in this theory is that housing "bubbles" typically do not "pop", rather prices deflate slowly in real terms over several years. Sellers tend to want a price close to recent sales in their neighborhood, and buyers, sensing prices are declining, will wait for even lower prices.

I keep www.mortgageobserver updated regularly as there seems to be new happenings in the mortgage refinancing spectrum and from what I'm hearing, I can now make the assumption that in an efficient market, prices would clear immediately, and we would see the entire price decline in a short period. However since prices are sticky, real estate markets do not clear immediately, and instead we see a drop in transactions.

Fannie Mae is projecting that existing home sales will fall as well as new home sales. One of the rarely told stories of the housing boom is the jump in turnover of existing homes. Many of the sales were from investment and second homes. I've always believed that the last couple of years has seen over building and in my opinion, this will as well contribute to a little bit of a slow down in new home sales. I'm estimating that with the falling home prices, mortgage equity withdrawal will decrease as people are seeing less equity in their home to extract. The impact on consumer spending is unclear and it will be a drag on economic growth.

Richard Hadermann is a 10 year veteran of the Tampa Mortgage industry and he writes for the web site http://www.mortgageObserver.net He gives his insight on the mortgage industry and also has a weekly internet podcast where he educates consumers on creative and new loan products as well as the risky loan products that you need to stay clear from.

Understanding Your Credit Score

By Martin Lukac

Do you know what your credit score is? Many people understand that they have a credit score, but they don't really know how it is actually calculated. If you want to improve your score or maintain good credit you should know how credit scoring works.

Credit scoring is the way that lenders determine how likely you are to pay back the money you borrow. It basically represents you risk level. The lower your score, the higher a risk you are to a lender. The higher your score, the less of a risk you will default on a loan.

With good credit comes low interest rates and favorable terms. Your credit score will determine much more than interest rates. Lenders, landlords, cellular companies and even your insurance company will look at your credit score in determining whether or not to do business with you. If you have a low credit score, you may pay higher insurance premiums and have a harder time borrowing money.

You've probably heard of your credit score called a FICO score. This is the score based on the Fair Isaac & Co. credit scoring model. These scores are based only on the information found in your credit report. FICO is not the only type of score out there. You can have a different credit score from each of the three major credit reporting agencies. It is possible to see as much as a 50 point difference between two scoring sources.

There are five major factors that go into your credit score. They are weighted differently, so some parts appear more important than others. However, they all will affect your final score.

1. Payment History

Your payment history makes up 35% of your total credit score. Your payment history considers whether you pay your bills on time or are late making payments. It will look at the frequency of late payments and how far behind you are on payments. How many accounts do you pay on time? Have you had major credit problems or filed for bankruptcy? Paying your bills on time each month will raise your credit score.

2. Amount Owed

The amount you owe will determine 30% of your total credit score. This section looks at the total amount you owe and what types of accounts you have open. Do you have large balances on all of your accounts? How much available credit do you have in comparison to the amount you owe? How much have you paid down on your accounts since they were originally opened? Paying your accounts down responsibly and not having high balances on your credit cards can raise your score.

3. Length of Credit History

The length of your credit history will result in 15% of your credit score. The longer your credit history, the higher your score. How long you've had certain credit accounts open will affect your score, as well as how long it has been since you've used your accounts.

4. New Credit Accounts

Ten percent of your score is based on how many new credit accounts you've established. How many new accounts have you recently opened? How many requests for your credit have been made? How long ago where you shopping for credit? Rate shopping usually will not hurt your score if they are made within a short period of time.

5. Overall Mix of Credit

The final 10% of your credit score is based onn the mix of credit you have -- credit cards, installment loans, mortgage loans, secured loans, etc. The more balanced you are, the higher your overall score in this area will be. You want to have a mix of all types of credit.

There are several ways to improve your credit score. Start by paying your bills on time. This is the one factor that will make the most impact on your credit score. Pay down your debt and limit your applications for new credit. You should also check your credit report and take the time to correct any inaccuracies.

Martin Lukac http://www.MartinLukac.com, represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com