THe aged old question .. Why cant I get a loan and why is my credit score so low! .

In today’s economy it will be very important for you to maintain a good credit score. Even if you do not plan on using it any time soon you will need it eventually. The cleaner you keep your credit the easier it will be to get financing when needed. Trying to correct an issue with your credit at the last minute will not benefit you as much as keeping your credit strong. Lets discuss how it we can go about getting this done and hopefully you can apply this to your situation.

We are going to use the example of someone that has a credit score of lets say 650, this is not terrible but it does need work to be able to obtain decent rates. Increasing this rate may even be able to help him with his current debts like credit cards , with better rates they can attempt to obtain lower rates.  There are a number of factors that go into your credit score and to raise it you will need to abide by these rules to correct your credit score.

So lets say for instance you have 4 credit accounts, a car payment, a first and second mortgage .

First Card is a Limit of 6000.00 and a balance of 5000.00 with a minimum payment 170.00 a month. Your second card is a limit of 4000.00 and a balance of 2300.00 with a minimum payment of 65.00 a month. The third card that you have is one with a limit of 4000.00 and a balance of 3000.00 with a minimum payment of 122.00 a month . Finally the last card has a limit of  3000.00 and a balance of 1500.00 with a minimum payment of 35.00 a month. Now considering thes amounts there are some very pertinent issues that we should be addressing but which order would we do them in and how and why.

Here is the first rule of thumb that you should be aware of and start focusing on currently , no balance on any credit account  should be more than 40% of your credit limit. So for 6000.00 your maximum balance should be 2400, 4000.00 should be 1600.00 and 3000.00 should be 1200.00. this will directly impact your credit scores both positive and negative so the question is how will address this and which order will you take to fix it.

Glad you had asked and I will gladly supply you my input to making your credit score improve. I always start at the lowest balance and I do this for reasons which I will explain . How you handle your debt will be directly reflected in your credit scores(Remember this statement always). I start with the lowest balance because we will be attempting to accelerate the payoff of this account , the more extra principal we will be applying will take a bigger bite out of a smaller balance and obtain our goals faster.  So as in our example our lowest balance we need to eliminate 300.00 dollars to get it to the 40% ratio on that account . ow even once we get there we are going to want to continue forward momentum on that and all accounts, but only pay minimum amounts on all accounts ut the one we are concentrating on reducing. Once we repeat this process on each credit account and get them at 40% we will shift gears and blow all the rest of the debt out in order. So your first goal that you need to work on is reducing your balances below 40% and then continue on with these additional steps.

Now even though 40% is your primary goal , it is sooooooooooooooooo important for you to pay your bills on time . Make sure you pay your bills so they will post at least a week early , and if you are going to be making extra payments on the account you are focusing on above the minimum make them when you have them. What I mean is do not wait until your regular scheduled payment , this is very important because every time you reduce your balance you are also reducing the amount you pay interest on for that month. So if you reduce it by 10.00 in the first week then you pay 3 weeks of less interest that the ten dollars makes up in dollars.  ow this techniques will give you an extra principal boost at the end of the month over paying it with your regular payment.

Following these steps will help you raise your credit scores and best off all help you get out of debt. Be persistent and consistent with your payments and will have remarkeable results.

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