I got told to always pay off my cards etc in full every month when I started to investigate credit repair This was one of the best credit repair secrets I was given. A lot of different sources told me the same thing. Boy is this wrong!. Something called the debt to credit ratio turned out to be much more significant and then I discovered a way to repair your credit score.
Firstly you have to get to grips with this ratio as it is almost always overlooked. Simply it is your amount of current debt to your total available credit.
For example:
Your available credit = $10000
Your current debt = $2500
Your debt/credit ratio = 25%
Why is it lenders prefer you don’t pay off your bills in full? For a start they make more money from interest charges, and by keeping a balance you also show you are a payer.
So how can you exploit the ratio and improve your score by having an outstading balance?.
The single most cost-effective tool is the use of a sub-prime store merchandise card which reports to one of the major credit bureaus. These cards are often misunderstood because of the way they are marketed either by email or on the Web. Most of the time people don’t like them, or trust them because of the outrageous claims they make, but many are real.
Waht is all about?
You apply for a card with a line of credit that is only good for purchasing goods from a particular store (usually an online mall or catalogue).
They will approve all-comers and you will get a line of credit for say $5000 that can be used exclusively at their store. If you purchase something you will get it on credit but have to make a cash deposit. So, for example you buy $1000 of stuff, put $300 down and make payments on the $700 balance.
The fast credit repair secret is that the bureau treats it like a normal card. So, instantly you have upped you limit, have a good debt-to-credit ratio and you are maintaining a balance. You will then receive pre-approved offers from other lenders who have got your details from the credit bureau. So you can do credit repair yourself.