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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Grow Your Credit Score

Ways to Grow Your Credit Score

Obtain a Copy of Your Credit Report

Late payments, bankruptcies, and other negative items can harm your credit score.  The good news is that there are several ways to improve it. It is easy to obtain your credit scores via the internet, telephone, or U.S. Mail. The top three major credit bureaus are Equifax, Experian and Trans Union, and they do not share information so all three must be checked for errors that may be negatively affecting your credit scores.

It can take up to 6 months to correct an error on a credit report; therefore, consumers should obtain copies of their credit reports at least 6 months in advance of making a major purchase like buying a home or car.  That will hopefully allow you enough time to identify and correct any errors.

Pay Down Credit Card Balances And Don’t Open a Lot of New Credit Accounts

prevent home foreclosureHigh outstanding debt and teetering on credit card limits, can negatively affect credit scores. Charging more than you can afford is not a wise use of credit. Consumers that can demonstrate their ability to use credit wisely earn the highest credit card scores.  Additionally, rapid account buildup may make you appear riskier to creditors, especially if you are a new credit card user.  Keep your balances low.  A low balance is often said to be no more than 25% of your available credit limit.  So if your credit card limit is $5000, then you should only charge that card to as high as $1250 to keep your credit score up.

You only need one or possibly 2 credit cards.  Close all open accounts that you don’t use.  Too much available credit can lower your credit score even if you do not have a current balance.

Pay Bills on Time

Paying bills on time is one of the simplest and most effective things a consumer can do to raise their credit scores. Even just one late or missed payment can dramatically lower a person’s credit score, making it difficult to obtain loans in the future.

If necessary, setup automatic withdrawal payments from your bank account or pay on-line—whatever it takes to make the task of paying bills more efficient. Because, the longer you pay your bills on time, the more you will improve your credit scores.

Inform Creditors of Your Financial Difficulties

Calling your creditors to discuss possible solutions for your financial difficulties is the best way to control the amount of damage your financial difficulties will have on your credit scores.   If you anticipate being late on a bill, call to make arrangements for when your next payment will be sent.  Many times a simple phone call will delay a creditor from reporting you to the credit bureaus. 

Video: Raise Your Credit Score (Bloomberg News)

Make Small Payments on Delinquent Accounts

The amount you pay on accounts is not always as important as the consistency of your payments. A consistent history of timely payments goes a long way improving a poor credit score.

Using debit cards from your bank, or most American Express, cards will not improve your credit score, since they are considered convenience cards, not revolving accounts. However, a late payment on an American Express card can negatively affect a person’s credit card report.

Video: Raise Your Credit Score FAST with this Insider Technique

Avoid bankruptcy

Bankruptcy may seem like an easy—short term—way out of debt. But, over time it is one of the worst things you can do for your credit score and it will result in costly high interest rates.

Avoid Foreclosure

When a home is foreclosed on, a homeowner can lose their home, and any equity they may have built. Their credit report will be damaged for several years.

Be Patient

It can take up to two to three months to improve a credit score. However, the sooner you can begin to manage your credit, the sooner your credit scores will begin to improve.  

Keep in mind that your credit report is not permanent. It is a reflection of your current credit behavior, and with effort and determination, it can be repaired--either alone or with the help of one of many top credit repair companies like ...

My Credit Group
San Marcos, CA 92069

Lexington Law

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Credit Score:

Consumer Federation of America | Fair Isaac Corporation

Correct errors:

U.S. Financial Literacy and Education Commission

Learn more:

Treasury Department Website

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Federal Trade Commission