Improve Credit Score Part Two

June 21st, 2009

Amount you owe & how Amount you owe can improve your Credit Score

Amount you owe is the amount you currently owe for your credit cards, mortgage, car, etc. Amount you owe is on your credit history and Credit Report. This can be good or bad, depending on how much you owe compared to the limit you have.

It is best to not max out your credit cards. Your Credit Report is based on the amount you owe on your credit card compared to the credit limit.

For example, if your amount owed as a percentage of your credit limit is:

0-30%: This will improve your Credit Score
30-60%: This is ok for Credit Score
60-90%: This is not good for your Credit Score

Your Credit Score will be higher if you have a large line of credit and only owe 0-30% of the credit line available in your name.

Does having no debt improve Credit Score?

No. It is the ratio of credit line or credit limit and your debt that determines how good your Credit Score is. For example, it is better to have three credit cards of $10,000 credit limit and only owe $2,000 than having one card of $3,000 credit limit and owe $2,000.

Mortgages and Credit Score

Mortgages are on your Credit Report. If you have many loans you don’t want to continually go to the same bank. Your mortgage broker will help you (he gets paid if you get your loan). Be up front with your mortgage broker about your loans so he can shop at different banks. If he doesn’t know where your other loans are he might try to get you a loan at a bank where you already have a loan and they could deny you.