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9 Secrets to increase your credit score that FICO wants a secret.

By
Services for Real Estate Pros with Blue Water Credit
 
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FICO, the Fair Isaac Corporation, is the preeminent credit scoring company, serving almost every bank, lender, and financial organization with its credit reporting of hundreds of millions of Americans. Although they may be highly visible as the giant in the industry, they’re extremely secretive when it comes to how they actually calculate your credit scores. While we do know in general what helps or hurts your score and the weighted percentages that go into their calculations, FICO keeps its algorithms a tightly guarded industry secret.

However, there are several nuggets of information that have been leaked by FICO personnel or disclosed by industry insiders. Many of them art controversial. Some have even been called “borderline cheating” by FICO because they are so effective, but they admit that they’re all legal. 

Of course we recommend you follow responsible and prudent financial practices – like maintaining a low debt load, paying all your bills on time, etc. to legally and ethically raise credit scores, but it’s sure nice to know there are a few credit score hacks to boost your score, even if FICO doesn’t always approve! 

Here are 9 secrets to increase your credit score:

Become an authorized user on someone else’s credit card.
Perhaps the most efficient way to increase your credit score in a short time is by becoming an authorized user on someone else’s credit card. Once you’re authorized, the new positive trade line will show up on your credit as if you’ve had it for the duration. It’s important you do this correctly – it has to be a credit line in great standing. Additionally, it should be someone you trust well (and they trust you!) because if the primary user runs up big debt, has late payments, or defaults, you’ll be on the hook and your credit will actually be damaged! But FICO knows a lot of parents do this to build their teen or college-aged children’s credit – and it’s a perfectly legal practice.

Request an increase (with no intention of using it.)
One way some people try to increase their credit score is by increasing their debt to available balance ratio. However, instead of paying down their debt responsibly (which we’d recommend!) they call their credit cards and other revolving debt creditors and request a credit line increase. If granted, their ratios look much better to FICO without having paid a dime off their balance! 

Report your card lost.
This secret tactic was actually leaked by a high-level FICO employee in the context that they’ve discuss how to handle it.  With the goal of adding an additional positive trade line (without applying anywhere or even if you can’t qualify!) some people call their creditors and report their credit card stolen. When that happens, they will usually close that account and open a new account and move all of your credit history over to the new account – including the original open date. Viola! You now have two positive and seasoned credit lines where there was just one before. 

Deny, deny, deny.
When it comes to small accounts that damage your credit score – an unpaid parking ticket, a medical bill that you forgot to pay on time, or a miniscule balance on an old cell phone – it makes sense to dispute them with the credit bureaus. Since the debts are small and old, the companies and creditors will most likely not even bother going through the paperwork and hassle (which means man hours and $) to dispute them. Therefore, by denying they exist or they’re correct (by disputing them,) you’ll probably get some negative “anchors” off your credit report. 

Add MIA accounts.
A surefire way to build your credit is to add positive accounts that aren’t currently being reported. Although FICO doesn’t actively publicize this information, you can do that by requesting unreported accounts be reflected on your credit. Think about any company that pulls your credit and you pay the bill on time. For instance, cell phones, Internet providers, utility companies, and medical billers often don’t bother reporting credit (because it’s not mandatory.) But if you ask them to do so, they very well might comply – posting a well-seasoned, positive new trade line on your credit score. Boom! 

“Bribe” your creditors.
Of course you shouldn’t bribe anyone, but that’s a term FICO uses loosely for consumers who negotiate “Pay for deletion.” If you’ve missed enough payments to have an account in collections, they’ll often agree to erase any negative credit reporting for that account if you pay it off in full. Make sure you get their promise in writing and you’ll probably have to make a lump sum payment, but the good news is that collection companies often settle for a smaller percentage of your original debt (because they paid pennies on the dollar for it.) 

Erase the evidence.
With more and more student loans going into default because of unemployment, titanic student loan balances for graduates, or just the high cost of living, the damage of a missed payment can hit your credit score hard. But don’t be dismayed – there is an option to get the negative reporting erased from your credit report IF you rehabilitate the debt. That means arranging a plan with your student loan lender to bring the payments up to date. Once you make 9 out of 10 payments on time, there is a one-time exemption (with Federal loans only) that they’ll erase the damage from your credit. 

Crack the secret Report Date code.
Of course it’s easy for consumers to know when their credit card or loan’s Due Date is and pay on time, but there’s another number that you should be aware of, which is often a secret. Each creditor also has a Report Date – when they send their information into the credit bureaus and FICO. If you use your credit card a lot and pay it off at the due date, the higher balance will always show on your credit report that month because Report Date is before Due Date. So an insider tip to increase credit score is to call your creditor, ask them what day they report, and make sure to pay your accounts off or down before that date – not the due date. 

Think lower.
FICO calculates a significant portion of your score by your credit utilization ratio – how much debt you keep to how much your total available balances are. Common advice is that you should keep that ratio at or below 30% ($3,000 of debt for a credit card with $10,000 available. But FICO insiders now confess that 20% or even all the way down to 10% or less are even better ratios to maintain, and will boost your score. However, don’t go all the way to 0% because it won’t show an established payment history they can use in their calculations (you won’t have any payment.)

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