From our recent CardRatings article "7 ways to raise your FICO credit score", you know the basic moves to improve your credit score include establishing credit early, ditching debt and correcting credit report errors. Now it's time to make your score soar. These seven advanced tips will help increase your credit score even if you can't increase the payments on your current debt.
Get some goodwill
Behave yourself and card issuers could raise your credit score for you, says Deborah McNaughton, author of "The Essential Credit Repair Handbook." If you've only got a few dings keeping your credit score down, request a "goodwill deletion."
"You're basically requesting that they remove a negative item because you're such a good customer," she says. "If it's something that's happened once or hardly ever, the more years you have with that creditor, the more likely they are to help you out."
Notice the notices
Debt can potentially vanish with a single financial windfall. Bankruptcies, judgments and tax liens stay on your credit report for longer.
"Judgments remain on a [credit] report for seven years from the filing date and tax liens can remain on the report indefinitely if they're not paid," says Barry Paperno, consumer affairs manager for Myfico.com.
Public notices like tax liens, judgments and bankruptcies can lower your score by 100 points or more and wreak the most havoc for the first two years they're there, adds McNaughton.
Rock the oldies
"Clients come to us wanting to pay off their credit card and once they do, they call the company and close it out," says Deatra Riley, financial education manager with CredAbility, a nonprofit credit counseling agency headquartered in Atlanta.
But be forewarned that closing unused credit lines can actually damage your credit. According to FICO, the length of your credit history accounts for 15 percent of your credit score, meaning that closing out an old card can hurt your credit.
"Closing out [an unused account] also reduces your credit utilization," adds Riley.
Another 30 percent of your score is determined by credit utilization--how much you owe in relation to the amount of credit you have available. Riley says that consumers should ideally keep their debt between 15 and 30 percent of their credit limit. Cancel a high-limit card and your utilization could skyrocket.
A quick way to improve your credit utilization is to ask for a credit limit increase.
McNaughton says that this tactic works best "if your income has been stable and you've been making your payments on time." She adds that when card issuers review your account for a credit limit increase, they'll look at your full credit report, including how much you owe on other cards.
"If you're maxed out across the board, there's a good chance that you won't get your [limit] increased," she says. Keeping your utilization below 30 percent will give you a better shot.
Perfect your timing
Changing when you send in payments can impact your credit score even if you can't increase the amount you're paying off, says Paperno.
"Let's say that you have a card with a $1,000 limit…let's say this month you charge $500, but instead of waiting to get your bill, you pay half. What's going to show up as your balance will be $250, not $500," explains Paperno.
Instead of winding up with a 50 percent utilization that can drag your credit score down, paying off half of the balance early means a sweet 25 percent utilization which can bring your score up.
Explore the loan zone
Your credit cards might have sky high interest rates, but other loans don't. Pulling money from home equity, cash value life insurance or a personal loan can soothe the credit card demons at a substantially lower interest rate.
While loans against a life insurance plan don't require credit checks, opening a new home equity or personal loan can put an inquiry on your credit report and in most cases lower your score by up to 5 points, says Paperno.
"Inquiries appear on your credit report for a couple of years but they only impact your score for the first year," Paperno adds.
Don't be too quick to settle
Debt management organizations can lower your interest rates, reduce late payment penalties and negotiate a workable payment plan with your creditors, allowing you pay down debt quicker and raise your credit score. But debt settlement, while it may sound similar, is a whole different beast.
"Debt settlement is when you take the total amount that you owe and you pay a percentage towards it," explains Riley. "That may have a severe impact (on your score) because you're not paying off the total amount of debt."
Settling can also have tax ramifications. The IRS reports that consumers who have more than $600 in debt dismissed must pay taxes on the total amount of debt canceled. While both debt management and debt settlement work to eliminate how much you owe, only debt management programs will help you build credit.
If you've run out of options and are thinking about entering a debt settlement program, consider how it will impact your taxes and credit score before taking the plunge.
Correction, Jan. 17, 2012: According to John Ulzheimer, president of consumer education at SmartCredit.com and an expert on the FICO score, the ideal percentage of credit utilization is not 30 percent, but from 1 to 10 percent.