Q: "Why is my friend's credit score so much higher than mine? We make the same amount of money." This question was asked of me last week by one of my buyers and it made me realize that if one person was asking it, more people would like to know the answer.

This was my answer to those buyers and I hope it helps you with your credit score and understanding.

A: There is no simple answer, a credit score is made up of numerous mathematical factors there is no one thing that they did that made there score better, it is usually a life altering family decision and with time their score has risen. I then gave them a list of a few things that could increase their score over time, but there is no quick fix. (There are, but not all ethical)

Here is that list of helpful hints to raise your score over time.

1. Use your credit card as much as possible, but DO NOT go over the 30% mark. This means if you have a $10,000 credit card limit never exceed $3000.00.

2. Pay off your credit cards. Pay it off every month and use your banks auto pay feature to make sure it gets paid off every month on time.

3. Use your credit card instead of your debit card. (Especially on the net) With a debit card you have no protection against fraud and if someone steals your information and empties your bank account, with a debit card you will not get that money back.

4. If you have a lot of credit cards with high balances and you are trying to pay them down. Pay 1/2 your normal payment every 14 days (I suggest every other Friday) This does two things, first it eliminates 14 days worth of interest on the 1/2 payment and second there are 12 months in a year and paying every 14 days adds 2 extra half payments every year and will lower debt a lot faster.

4.5 When paying off credit cards always pay off one card at a time and always pay off the one with the highest interest rate first. This will save you more money in the long run. Do pay the payments required every month on all cards, but just pay extra to the one that has the highest interest first.

5. DO NOT close the credit cards once you have them paid off. A lot of people think it is better to close the account once you have the account paid off, this is not true. The reason is if you have 3 credit cards all maxed out and you pay one of them off and close it this is what happens.   3 cards = $10,000 limit each = $30,000 in credit. If you pay off one, your debt to available credit is 66% of your available credit, not great, but better than no available credit. If you close that card you immediately go back to 100% available credit used and your score drops like a rock off a bridge.

6. THIS ONE HAS BEEN ARGUED BY MANY (My opinion only) If you already own a home, some will tell you to pay your credit card debt with a home equity line of credit to save money on interest. I disagree totally! Credit card debit is debt against your name; if you don't pay it ruins your credit. If you put the debt from your credit cards in to the debt of your home and you can't pay, they take your home away. It just isn't worth it!

If you do these things on a consistent basis, your credit score will go up and you and your friends can both enjoy the lower mortgage payments that come with a better credit score. For more information on saving money and bringing up your credit score, please contact me anytime.

Todd Clark - broker
Kastings & Associates
(503)524-9494
Todd@IFoundYourNewHome.com
www.IFoundYourNewHome.com