By Philip Tirone, author of 7 Steps to a 720 Credit Score
If you have time to grab a cup of coffee, you have time to raise your credit score.
Maybe you think this is impossible, particularly if you have bad credit and have been trying to raise your credit score by minimizing your debt and avoiding late payments.
But I’m about to tell you how to raise your credit score in just ten short minutes.
Let me start by sharing a shameful secret that the credit card companies do not want you to know. About half of all credit card companies out there are intentionally misreporting your credit card limits to the credit-reporting bureaus. Some of them don’t report your limit at all.
And this causes your credit score to plummet. But if you take ten minutes to call the credit-reporting bureaus and your credit card companies, you can correct this misinformation, and you can raise your credit score lickety-split!
It works like this: A big percentage of your credit score is based on your balance-to-limit ratio. The lower the balance-to-limit ratio, the higher your score.
But if the credit card companies are reporting your credit card limits as lower than they actually are, your ratio will appear higher than it actually is, and this will cause your score to erode.
Let’s say, for instance, that your Visa balance is $500 and your limit is $2,000. In other words, you are using about 25 percent of your limit. But if the credit card company is reporting your limit as $1,000, you appear to be using about 50 percent of your limit.
This is bad news for your credit score. Ideally, you should never use more than 30 percent of your limit. If you appear to be using 50 percent of your limit, your score will surely suffer. After all, the credit-scoring bureaus will assume that a person using a lot of his or her available credit is suffering from financial stress.
On the other hand, a person who uses little to no credit has more cash reserves, and is therefore less likely to default on payments.
So if you want to raise your credit score during your next coffee break, take these three easy steps.
1. Download your credit report from http://www.my720ficoscore.com and check for any inaccurately reported credit limits.
2. Call the credit bureaus as well as your credit card companies immediately and ask to have the limits reported properly.
3. Download the free ebook, What Your Bank Won’t Tell You About Credit to learn more about bank and credit card scams.
Philip Tirone is a mortgage broker and the author of 7 Steps to a 720 Credit Score, which provides seven simple steps about how to build credit and raise your credit score.
Editor’s note: there is a fee of $12.95 to get your report.