How to Increase Your Credit Score by Properly Managing Credit Cards

In this difficult economic climate it's very important to make sure your credit score is as high as it can be. It's much more difficult to get a mortgage, to refinance, to get a car loan, or to keep your credit line than it was just a year ago, let alone before that, with a low credit score. In a perfect world you would pay off all your credit cards, but that's easier said than done. There are many factors that go in to your credit score, some that you can more easily control, and some that take time and sacrifice. I will focus on an easy way to increase your credit score if you carry credit card balances.

If you have a maxed out credit card, transfer some of the balance to another credit card
The credit reporting companies look at credit card balances in a strange way. Instead of looking at your total amount of credit, and the percentage you have used against all of the cards, they care more about how close you are to maxing out each card. They want your balance to be less than 50% of your limit. So, let's say you have a $5,000 credit limit on card A, a $7,5000 credit limit on card B, and a $10,000 credit limit on card C. If you don't carry a balance on card B and card C, but you have a $4,000 balance on card A, your credit score will be negatively affected. Does it make sense? No, but that's what happens. Luckily for you, you can easily fix this. Simply transfer $3,000 to card C. You want to transfer this to your highest credit limit card so your percentage will be the lowest. So, after the transfer, card A is 20% maxed, card B is 0% maxed, and card C is 30% maxed. Is this the best mix? Not necessarily, but it's the easiest way to make only one transfer (saving you transfer fees). As long as you're below 50% on any card, your credit score will improve.

Do not close any credit cards, and try to increase your credit limit
Another important fact to keep in mind is that, to a smaller degree, the total percentage of balance to credit limit matters. You don't want to reduce your total credit limit in any way, so don't close any current credit cards. Additionally, the older credit cards you have contribute to a higher score, so you don't want to lose out on that bonus. Finally, following the fact that your percentage of balance to credit limit matters, you should call each one of your credit cards and request a credit line increase. The worst thing they can do is say no. If you could get card A to increase your limit to $10,000, then making no transfers will put you at 40% for that card, which would be great.

In this economic environment, having a high credit score is very important. Many factors go into your credit score, some things you can easily change and some not. Focusing on credit cards, if you have a balance on your credit cards there are a few easy tricks to increase your credit score. Do these today and see your credit scores improve soon.