The credit crisis has left millions of consumers with lots of questions regarding where they stand in the credit lending arena. Easy credit and nothing down mortgages are a thing of the past. One of the most important things you can do to ensure that you can qualify for a loan when you need to is to shoot for the magic number.
What is the magic number?
Your credit score can range from 300 to 850. Lenders will usually consider you for a home loan or car loan with a credit score of 525 and up. However, due to the recent credit crunch and the huge losses from the sub prime market lenders have tightened their belts and obtaining credit has become harder than ever before.
The ideal credit score is considered 720 and above. This score pretty much opens any and all doors for you when it comes to getting approved for credit. Keep in mind that just because you have a 720 credit score does not mean you may qualify for any type of home loan or any amount. There are other factors to consider when it comes to qualifying for a home loan such as debt to income ratio.
If you don't have a 720 score, then the first step is to shoot for a 660. The 660 score range means you can qualify for most major credit cards. When applying for a home loan lenders pull a tri merge credit report and consider the middle score when it comes to lending approval. For example, your Equifax score is 670, Transunion 640, Experian 610 then the middle score considered for lending qualification would be 640.
One of the sure fire ways to increase your credit scores is to make sure your true credit limits are being correctly reported. Credit limits showing on your personal credit profile have an important impact on your credit score because it reflects your true debt to credit limit ratios.
After numerous consumer complaints nationally one of the largest creditors in the country finally decided to report the credit limits of its customers. Have any idea who the company is? It's Capital One, and because of this change many consumers credit scores increased.
Unfortunately, some creditors have not adopted this and as a result millions of consumers are left out of the dark when it comes to ensuring their true credit limits are being accurately reported on their credit reports. This of course impacts the credit score and impacts what type of interest rate or loans a consumer qualifies for.
American Express and HELOCS (Home Equity Lines of Credit) are known for not reporting the accurate credit limits of an account. For example, the American Express green card does not have an actual credit limit so the limit reported on the credit report of a consumer is actually the maximum amount that you have ever spent on that card. So if all you have ever charged on your AMEX was $3,000, and you paid it in full when the statement came and then you spend another $3k the following month, the $3,000 limit reported would show that you are using your card at 100% of your credit limit.
How do you leverage the true credit limit reporting to your advantage?
You basically have the power to set your own credit limit with AMEX on your credit reports. The question is what's the percentage you want to shoot for on your debt to credit limit ratio with AMEX?
No more than 30%! So, if you know that you regularly charge let's say $3,000 per month on your AMEX then you want to make sure that the true credit limit reporting for your AMEX account on your credit reports is $10,000 or more. Why? Because if your limit reporting is $10,000 for AMEX and your charging $3k monthly then you are right at 30%, therefore your score will boost tremendously!
How do you set your own credit limit?
To increase and leverage that AMEX credit limit higher on your credit report, you should use your AMEX card and spend over $10,000 such as travelers checks or something like a TV then pay it off when the statement comes. Go back to spending $3,000 again like normal. Your AMEX credit reporting limit would then increase to $10,000 as your limit and your regular spending habit of $3,000 would be below 30%.
You will need to reset your limit again in about 7-8 months so keep that in mind. This strategy alone can boost your credit scores 25 or more points!
Marco Carbajo is the owner of UCan2, Inc., a national marketing company specializing in credit repair and FICO enhancement. He is author of many credit and FICO related articles. If you are looking for help to repair your credit or increase your FICO Scores visit us at
Article Source:Marco Carbajo
How Can You Obtain Credit During the Credit Crisis in America Today?
