Professor Tate Answers:
Though nobody knows exactly how important each factor is in calculating the credit score, one known factor that plays a large role is your utilization rate.
Your utilization rate is basically "how much of your available credit are you using?"
However, there are a few things about the way FICO calculates your utilization rate that are a bit strange. One small loophole in particular can result in you being able to quickly boost your credit score without actually having to reduce your credit balances.
For example, let's say you have two credit cards. Both of them have a $5,000 limit. One card is maxed out, while another card has a balance of zero.
On the other hand, if you had distributed your credit balance half and half over the cards, your maximum utilization would be only 50% each.
In an independent study of 70,000 different credit scores, researchers found that people with 720 or higher credit scores tended to have utilization rates of 20% or less.
So try to get your utilization rate between 1% and 35%. If you have a low balance on one card and a high balance on the other, try balancing your cards out to get your maximum utilization rate down. This one technique can very quickly give you a credit boost, literally in just a few days.
You asked, now you know!
-Professor Reel S. Tate