Your credit score is a reflection of how potential lenders view your credit-worthiness. Earn a high score, and you will enjoy low interest rates. Suffer from a low score, and you will have trouble even getting a loan or home mortgage.

You are probably tired of hearing about the same old ways of raising your credit (or FICO) score: pay your bills on time, and get negative information removed from your credit report. In this article, we will share a little known secret for building your credit score.

The method we will discuss is lowering your “debt-to-credit ratio.” This ratio is a comparison of the amount of debt you are carrying to the available credit you have been extended. For example, if you have $10,000 in unsecured revolving credit accounts (like charge cards), and you are currently $2,500 in debt, then your debt-to-credit ratio is 25%.

Here’s the secret: If you think you have excellent credit because you pay off all your bills in full every month, you are wrong! Think about it. Your lenders want you to carry some amount of debt - they make their money by charging you interest on the balance in your account. If you pay off 100% of your balance every month, your lenders are not realizing any revenue from your account.

Maintaining the proper debt-to-credit ratio will boost your credit score. If your ratio is too high (you owe a lot), you are not a good credit risk. If you ratio is too low (you pay off your entire balance every month), you a not a profitable customer for the lender.

Most Americans have a debt-to-credit ratio that is too high. How can you bring it down, without sacrificing everything you like in life? The answer lies not in lowering your debt, but in raising your high credit limit! You will probably have trouble opening new credit card accounts to raise your credit limit, but there is another solution: sub-prime merchandise cards. These are cards attached to a line of credit that allow you to buy products from a specific vendor (usually the one that sold you the card). They are not VISA or MasterCards, so you won’t be able to buy groceries and fill up the gas tank with them, but they will raise your high credit limit.

Here is how a sub-prime merchandise card works. You are required to put down a deposit on whatever you buy with the card, and then finance the rest. For example, let’s say you buy $1,000 of merchandise. You pay a deposit of $300, and finance the remaining $700. The sub-prime card company reports this to the reporting bureaus, and your high credit limit is raised by $1,000 overnight. The key to this strategy is to make sure that the sub-prime merchandise card you select guarantees that it does report to the credit bureaus (not all do).

Your new, lower debt-to-credit ratio will signal your credit worthiness to lenders, and soon your credit score will rise, and you will start receiving pre-approved credit offers in the mail.

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