How to Build your Credit

Lately, there has been a lot of issues as far as the credit repair companies are concern. In 2006, the FTC hounded around 20 of the credit repair companies in a crackdown called Project Credit Despair. In addition, the agency has pursued a total of 70 credit repair companies to date.

You don’t need credit repair companies to improve your credit. Below are the Seven things not to do to boost your credit score!

1.)Don’t charge anything at the wrong time.
Your FICO score is impacted by a ratio called the “Total debt to total credit ratio.” You should understand that the larger the total balance as a percent of the aggregate total credit of all credit cards, the lower the score will be. It is estimated that you lose 1 FICO point for every percent of your credit limit that you use. So if you have a total credit limit of $15,000 and have an outstanding balance of $7,500 (50 percent), your score would be 50 points lower than if you had a $0 balance. Remember that if you can’t pay off your total balance in full, you should try to keep it below 25 percent of your total credit limit.

2.)Don’t apply for a lot of loans and credit cards in a short period
Creditors don’t like to see a borrower who’s gone on a credit spree- applying for a lot of new accounts or loans in a short period of time.

3.)Don’t use your credit card for at least two months before applying for a loan.
The payments that you made may take a few weeks or even a couple of months to get reported by the creditors to the credit bureaus. By not charging at least two months before, it’s more likely that all the payments you’ve made to date will be seen in your credit score by the time a lender ask for it. Please read the first don’t limit your overall balance as a percent of your total credit limit.

4.)Don’t missed a payment.
You should always pay your credit card bill in full and mail it as soon as you receive the statement.

5.)Don’t be too unconcerned about your credit
You should always check your credit report and FICO score for any invalid information posted by the creditors. Also, checking this would allow you to catch any identity thieves. Keep in mind that you can get a free copy of your credit report annually from

6.)Don’t just own a few credit accounts
Think about opening a couple of credit-cards, or taking out a personal loan. Lenders prefer to see a potential borrower responsibly managing a mix of revolving debt.

7.)Don’t close unused accounts when you transfer debt.
Closing any unused credit accounts will significantly increase your debt to credit limit ratio. Remember the first don’t – try to keep your balance below 30 percent of your total credit limit. For example, assuming that you have four credit cards, which have credit limits of $10,000 each but one of them is unused and you owe $10,000 total balance on the other two cards, closing the unused credit card would increase your total debt to credit limit ratio from 25 percent ($10,000/$40,000) to 33% ($10,000/$30,000)