Cleaner Credit Raises FICO Scores

8 general guidelines for keeping clean credit

1. Minimize credit inquiries;
2. Pay bills early;
3. Pay off revolving cards monthly;
4. Never close a credit account;
5. Don't switch credit cards to get the best rate;
6. Keep the oldest credit account on your credit report;
7. No more than 2 major bank cards;
8. No more than 50% of your revolving credit limit

Minimize credit inquiries

You should only have your credit pulled when you are ready to act. If you are thinking about purchasing a new car, then you should have your credit pulled and purchase the car within two weeks. If you are thinking of purchasing a home, you should pull your credit several months in advance to check for any inaccuracies. Then have your credit pulled again when you are ready to actually make the purchase. Credit inquiries account for 10% of your total credit score. When the time comes to purchase a new home or refinance your existing home, that 10% could make a big difference.

When you get a copy of your credit report, sit down and review it. If you find any inaccuracies, don't wait to try and fix them. One of the biggest mistakes people make is procrastinating. Errors take time to fix. So take the time to fix them. It could mean a huge difference in your credit score.

Another way to get cleaner credit is to pay down high balance credit cards. Ideally you want your balance not to exceed 33%-50% of your credit limit.

If you decide to pay off a credit card do not make the mistake of closing the account. Having a high maximum credit limit with no balance will help your score whereas closing an account will lower your amount of available credit and can damage your scores.

If you're debts are under control now, but want to improve your bad credit history, the most important factor is to make your monthly payments on time. Use pre-addressed envelopes enclosed with your statements to mail your payments and call the company if you don't receive your usual statement. Also send your payment as early as possible if you carry a balance. Most companies calculate interest on a daily basis, so the sooner they receive your payment, the less interest you'll pay.

Credit inquiries within the same industry within a 30 day period only count as one inquiry. Many lenders will "scare" you from shopping with a different lender by telling you otherwise.

» DISCLAIMER: The information contained in this article on 'Cleaner Credit Raises FICO Scores' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.