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Trick The System…Making Credit Card Payments To Maximize Your Credit Scores

A common statement I hear when discussing credit with my clients is that they pay off their credit cards every month.  This is a good practice to maximize your credit score and save interest payments (you’re only charged interest on balances carried into the next billing cycle).  But it is WHEN you pay off your card that’s relative to your credit scores.

Most people pay their credit cards when they receive their monthly statement.  This habit actually hurts your credit scores.

Almost all banks report your credit card balance at the STATEMENT DATE, not the due date.  So by the time you receive your statement the balance has already been reported to the credit bureaus, effecting your scores.

To beat the system, note your statement date and pay off your cards a few days before you know they statement will be generated.  This way you will truly maximize your scores with 100% available credit reporting to the credit bureaus.

Credit card utilization is 30% of your FICO score, falling 2nd to only payment history which is 35% of your FICO score.  Age of your credit is 15%, hard inquiries into your credit 10%, and credit mix (auto, credit cards, mortgage) amount for 10% of your FICO score.

So keeping payments on time and low utilization on your credit cards make up 65% of your credit score which is significant.

If you have any questions about how to raise your credit scores, feel free to contact me direct.

Jason Hall

President and Certified Credit Expert

RapidRescoreCredit.com

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Direct- 949.505.9971

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This is what happens to your credit when you stop paying your credit cards…

A common question my clients have is why one negative account turns into two?

Here’s a scenario that happens often with a credit card.  You use your account for years and you fall on hard times and can’t pay the balance off.  So you stop paying and the credit card account begins reporting 30, 60, 90, 120 days late.  Once it hits the 120 mark the bank will typically “charge off” the account.  They then sell that debt to a collection company.  Most are sold for a fraction of the balance.

So now you have a new collection account appear on your credit report.  You also have the charge off from the original creditor.  This one debt has now turned into two derogatory accounts on your credit report.

It’s best not to ignore your credit card debt even if you can’t pay off in full.  It’s best to communicate with your credit card company and let them know you can’t pay off the debt right away, but work out a repayment plan so that the account doesn’t go into collections nor show as a charge off.

If you need more information about what to do about specific scenarios on your credit report, feel free to contact me direct. I’d be happy to help.

Jason Hall

President and Certified Credit Expert

RapidRescoreCredit.com

RapidRescoreBlog

Rapid Rescore Credit On Facebook

Rapid Rescore Credit On LinkedIn

Direct- 949.505.9971

Mobile- 808.633.5023

Fax- 866.567.8054

BREAKING NEWS!! You can now get your mortgage FICO score online!

FICO just announced that you can purchase a FICO score that is the same as what your mortgage lender uses.  So now there will be no confusion about online credit scores being different than a lender score.

Please read this article!  This is huge news as most of my clients had no access to a lender score without allowing a mortgage lender pull their credit, creating a new hard inquiry that could lower a score.

http://money.cnn.com/news/newsfeeds/articles/prnewswire/CG21181.htm