Raising Your FICO Score.

In our review of Suze Orman's new book "Suze Orman's 2009 Action Plan" we discussed how important it is to keep your FICO score in check. In keeping in spirit with our 2009 goals, lets explore how our credit ratings work.

With interest rates reaching historic lows, how low depends on a number much more personal than anything set by the Federal Reserve, your credit rating. The better your credit score, the better your rate. A few points up or down can mean paying hundreds of dollars more each month or worst case be denied a loan.

Almost half of Americans have a credit score less than 720, the minimum score needed to qualify for a home loan. The good news is that your rating is not set in stone. With a few simple steps, you can raise your score and lower your interest rate significantly.


Here is what Phillip X. Tirone, the author of "7 Steps to a 720 Credit Score" and founder of The Mortgage Equity Group, suggests. Here is a few of those steps:

STEP 1- Keep your credit card balances under 30 percent of your limit. To increase or maintain a score, a home buyer's balance on any one credit card should be no more than 30 percent of the limit. For instance, if you have a $10,000 limit on a VISA card, keep the balance at no more than $3,000. The debt a person carries on a credit card in proportion to his limit is called a "utilization rate" and credit bureaus respond more favorably to low utilization rates.

STEP 2.- Have a least three revolving credit lines. Credit bureaus give higher scores to people with at least three revolving credit cards (i.e MasterCard, Visa, American Express, or Discover). If you don't have active credit cards, open some. If you have more than three credit cards, do not close the accounts. Closing them will hurt your score.

STEP 3.-Verify the accuracy of reported credit limits. Credit card companies often fail to report credit limits, or they report a lower limit than a person has. This causes the utilization rate to be reported as higher than it actually is, and it negatively affects a credit score. Errors come in all shapes and sizes. In fact, approximately 80 percent of all credit reports have at least one error. The worst errors, those caused by identity theft, can be a nightmare to remove from a credit report. Even simple, honest errors can be challenging and time consuming. By removing erroneous information from a credit report, your score could jump 20, 50, or even upwards of 70 points!

Step 4.- Create a structured plan to protect credit. Your credit report can change daily, so once you start to build credit, plan to maintain it. Create a budget and spend frugally, never default on payments, review credit card bills and bank statements monthly, run your credit report regularly, avoid being a co-signer, keep credit card accounts active, and protect your credit during and after a divorce.

Once you have taken these steps, you will be in a much better position to take advantage of the tremendous refinance and foreclosure pricing opportunities now available tot hose with favorable ratings.

To order a copy of Phillip X. Tirone's plan visit http://www.7stepsto720.com/