A tip to improve your credit score in 30 days!

Last months I decided to take advantage of great interest rates and refinance my home. I already shared my frustration about a lower than expected credit score. My interest rate was 5.875. The loan officer quoted 4.75% provided that our credit scores are excellent. (Which I thought they were). The reality came a bit as a shock.

We agreed with my loan officer that we’ll start the refinance process. In the meantime, I’d do my research (see if I could improve my score) and call him back a month later to see if he can pull my credit report again and possibly lower the interest rate.

I called Chase. They said that I was in fact 30 days late, so there’s nothing they could do to help. They have to report the truth! (A side note. When I talked to them a while back, a guy from Chase encouraged me to do a direct draft from my checking account and pay immediately over the phone. He said, if I do that I would not be reported as “late”. Obviously, they’re not always as truthful…)

Anyway, I was about to give up, and then I looked at my credit card balances. See, we are using credit cards for everyday purchases and then pay them off when statements come. However, the balances are reported to Credit Reporting Agencies and they don’t really know if you pay them in full every month or not! It’s all counted as your liability.

I knew that if I lower the balances I could increase my credit score. I didn’t know how much the credit scores would improve and didn’t really want to give up the convenience (yes, and the miles) of using credit cards. I use them personal and business expenses. My wife uses one for her job, and then gets reimbursed…

The total monthly balance was around 6,000-7,000. So, here’s what I did. We continued to use our cards, but I paid off the balance before getting the statement. For example, if I knew the statement was due on the 10th of the months, I would log in to my account on the 8th and pay the entire amount owned.

Did this improve my credit score? Honestly, I was surprised again!

I called my mortgage guy a month later, he pulled our credit report again, and was able to lower our rate to 4.7%. Yes, I was able to increase my credit scores by 50+ points!