Debt Free

It's a pretty well known fact that in today's economy, your credit score is one of the main determinants in your ultimate financial success. It will determine how much you pay to use other people's money. Every time you finance anything, from vehicles to view property, your credit score will help determine the interest rate you'll be paying. It obviously makes sense therefore, to have the highest credit score possible in order to minimize your interest rate and maximize your return on credit.

Here's a way to help raise one of the components of your credit score; your credit utilization score. Credit utilization is nothing but the percentage of your aggregate outstanding balances on revolving credit accounts compared to total of their limits. With that in mind, there are two ways to improve your credit utilization, and thus your overall credit score.

You can either pay down your outstanding balance or increase your total credit limit. In most cases it's far more expeditious to get your credit card companies to increase your limits. Why? Well, unless your outstanding balances are relatively low, or you have a sudden influx of cash, you stand a fairly small chance of paying them down in the short term to the extent they'd positively impact your credit utilization score.

They danger here is readily apparent to most of you. Once your credit limits begin to grow, it's a standing invitation to charge, charge, charge. If you're trying to get debt free and find financial prosperity, restraint here is vital. This technique is not for those with little financial discipline. If you're unable to restrain yourself from using your credit card, don't get the limit increased. If you are able to take advantage of this score raising technique, there are two basic ways to get a limit increase.

One way is to simply ask your credit card issuer. In many cases, if you have a solid, on-time payment history, they'll be all too happy to comply. After all, they make their money charging you interest on your purchases. The more you spend, the more they make. Another way is to engage in behavior that will cause them to give your limits a kick in the pants. How can you do this? As we've seen, the credit card companies make their money when you carry an outstanding balance; the larger the better (for them, not you). You need to entice them to raise your credit limit by showing them you can be trusted, but more importantly, you need to make them try to get you to carry a balance on a full time basis.

The way they'll try to get you to carry a full time, outstanding balance, is to, you guessed it, raise your credit limit. Their hope is, with that new, larger limit, you'll be encouraged to make use of it. To make them automatically raise your credit limit you can do the one thing that will accomplish both of the above two actions, and that's spend money on your card. I know earlier I said that you don't want to do this. The key here is to pay the card off in full every month. If you can't do that, you shouldn't be engaging in this strategy.

Charging up your card to high relative levels every month, then paying off the balance in full will keep you from paying interest on your purchases, but it will also make the card issuer raise your limit. They'll do their best to get you to leave some money on their card so they can make that interest income. You'll do your best to charge all you can for a couple of months, paying off the balance in full. You'll most likely be rewarded with an increased credit limit and an increased credit utilization score.

A few months ago I had another post that can help you quickly raise your credit score. Check it out for more info.