How to Raise Your Credit Score
Hopefully you've gone through the process of finding out what your credit score is looking to credit report so one thing to know before we talk about fixing raising your credit score is I've noticed and again I look at a lot of people's credit reports is fifty percent of credit reports have mistakes on them, so for example, if a client with the same name as her mother, there was a mistake there because her mother's charges were accounted there or you thought you paid a bill off, but in actuality says that you didn't. So maybe, you know, one thing that also has come up is that I have a few clients that owed money to a dentist or something like very small nominal like that and they're like, well, this was a wrong charge and I'm just not paying that in the dentist's and them two collections and just pay the bill like it's just not worth it to have it on me if you think there's a mistake or but if it's a small fee, it can really turn into a much bigger deal and it can prevent you from gett...
ing a mortgage or really, you know, I mean, we hear these stories of people who have low credit scores, so if it's something that small just paid off like put your ego aside if you will on just deal with it so what can you do? You can first of all, just look through your credit report on what it'll show isa literally show okay, I owed money to capital one I owed money to american express like you've never run a credit report it's like fifteen, twenty, thirty, forty, fifty pages especially if you had a history and that it literally shows did you pay your bills on time? So if you have paid a bill late, call the company up, call citibank, call american express and say can you take this off again? You're at know now until you ask for it and I know the few times I've called they've taken it off, so fix any mistakes you have two most likely do this through the credit report or through the original agency or the original creditor if there's a wrong item, you've got a disputed and I will say mistakes take six months to fix so get started now because now you know you've got the time, you don't have that pressing need of let go I've got to get a mortgage right away or you don't have that pressing need of like, oh my goodness, I really want to get a loan for my business like you're showing up now because you want to make those changes with your money, so if there's mistakes fix it, it can take up to six months dispute any wrong items there are mistakes so dispute them literally on experience on equal fax and trans union you khun dispute it takes a while pay the bill that's what I mentioned before if you have a small bill that's outstanding and you don't agree with it but you do owe the money just pay it it's not worth it stop applying for new cards that's the best way to so when I say stop applying for new cards is reyes asked for a limited increase on your card but stop applying for new cards pass up store charge cards which we mentioned before and avoid too many enquiries and the enquiries are really getting new credit cards asking for new credit cards are just constantly applying for new things transferring balances so doing this can essentially raise your credit score by not, um, applying for new cards, not getting the too many enquiries but more just asking for the limit increases and fixing any mistakes. We have a question from right start photography who's wondering if there's a professional that khun look over credit reports and search for mistakes who has something that will be outsourced or well, I think you know, I'm sure there are professionals I know somebody in my area that that's all they do, but usually they look att mistakes or they look at credit reports if you have bad credit so I mean, you know your history better than anybody else so the mistake is really going to be did I take out money in this credit card? But I didn't think I paid for it or did I thiss amount that they say io is not what I owe where they said I paid late but I didn't pay late so I mean you can absolutely pay an independent financial planner toe work with you on that I know that there are a few people that deal with credit consolidation but you know you're it's me better than anybody else so you're going to know the mistakes we did actually have a question that was talking about you know, credit card danielle nicole said who do we contact at the credit card wine reduced reverse a credit score change that they were partially to blame for ruining my credit was always excellent then there was a misunderstanding on theirs and mine and now they won't fix it well you and you're gonna have to dispute it through the site through the actual credit agency site so you can contest it that way I mean at the end of the day if you disputed and they won't do it there's nothing you can do about that tried disputing it through the site themselves and I've done that before so I mean it's it takes time so take the time to do that now keep the momentum wilson, you went on the chat room, you ask the question you're showing up today to watch this, like, take the time to make that change that's going to your homework, fashion girl is asking when trying to build credit backup, is it best to get a secured credit card through your bank or go with another company? Well, I think, okay, that's actually that'll lead us to our howto build credit when you don't have credit, so in terms of secured credit card versus not secured, if you cannot get an unsecured credit card, then you don't have a choice to get secured. So what? Really the difference between on security is so secure, it means that they're using collateral, which is money, usually as an asset, so a secured credit card would be a five hundred dollar credit card. You actually give the credit card company five hundred dollars, and then they say you've got five hundred dollars to spend on this credit card on the main reason you do that is because you want to build a credit history so they see that you're responsible, so essentially you don't spend that five hundred euro bill might be one hundred you paid off separately, but they're taking a risk that if you don't show up and pay your bill, they're going to take that five hundred dollars. So that would be your first your last step, so obviously you want to apply for an answer occurred credit card, because that's going to build your history right away without you having to fork over the money, so that should be the first choice. Where do you find unsecured cards? I would start with chances are has anybody got those flyers in the mail start there? Because if you've got something in the mail, chances are they've done their homework and they've thought that, for whatever reason, your credit worthy and they're asking you for a credit card. If you want to get a credit card, the other thing is gonna bank rate or cardweb dot com and you can look for a credit card that you like and just apply for one or two. If you get tonight, then you know you got denied and you've got to do a secured credit card. I wouldn't apply for twelve because that's part of the avoid too many enquiries. But if you apply for one or two, you should be okay. And if you get denied, then you know you have to do secured. You put being ticket out of his on the cards. Okay so here's how to build credit when you have no credit so the idea is that you're trying to build your credit so the first is which is the easiest and I'm not saying we all want to do it but if you have a family member that lets you become an authorized user on your card so that would be the first in which means you are responsible but they're sort of backing you up for guaranteeing you so that's the first one if you have any income open up a car so if you could show any income through a w two or ten ninety nine open up a card get the lowest rate card start using it for small occasional monthly purchases so if you put a big ticket item and you max out your card immediately a again I'm seeing the habits you're gonna have a hard time paying it off b if you've maxed out your card it's lowering your score because now you have no credit available to you now while you might pay it off and if that's really the case but if you're putting on five hundred thousand three thousand dollars big ticket item on there are you paying that off right away so if you're putting it on and paying it off immediately because you've got the cash that's a different story but if you're putting it off because he can't afford it that's in what you shouldn't do because your goal to build credit is to pass your balance each month, that means if it's fifty dollars, he paid off it's one hundred dollars you paid off. If it's two thousand, you got to pay it off. So doing this doesn't let you do that. You also have to pay all your other bills on time, like if you pay your electric bill later, it's gonna go on your credit? Maybe not as they'll turn off your electric bill, you're like e apply first few credit cards as possible, so again, apply for one or two don't apply for twelve and then don't co sign for friends like I put this on there recently because I kept hearing more and more stories about people said, can you help me out? I've got some bad credit. I don't know if that's happened to any of you let me know, but I I really I was shocked at how many people would co sign for a friend. You want to help your friends out? Absolutely and that's, you know, that's, not a monetary decision that's an emotional decision and I can't tell you to do it or not to do it, but if you co sign for a friend, you are putting your financial security at risk. So I helped them out in other ways, be a support for them, maybe lend them some money that you know, that you're made, like, get back, but don't co sign a credit card had a build credit when you don't have credit, become unauthorized user, so essentially the coastline for friends, you're asking your parents to do that, but maybe you're young, and your parents will do that for you, or if your spouse or sister or sibling, if you have any income, chances are you will be able to get a card so one of them, when we talk about banking, one of the things I like to do, we're in the era of big banks. I mean, the banks keep consolidating, so you could go to a credit union, but there's there's some good reasons to be with a large bank to so I've been with chase for a long, long time, and I don't work for them. This is just my bank. One of the things that I do is wherever I bank a chase, whether near my office in new york city or its at my home in connecticut, as I go into the local bank, can I? Why don't we introduce myself to the bank manager, even though I do most of my banking online, through online bill pay and you know gosh, I can't remember the last time I wrote a check I mean, really everything is online I still go into my bank and I say hi, I'm galya get sean I've got an account here, my business account here. Nice to meet you. Can you help me? I usually don't either help, but guess what I've made face to face contact so do that if you're banking anywhere, go into your local bank people still like that touch they still want to know you and when you need a new credit card, you can go to your local bank and say don't remember I met you six months ago I met you a year ago I've had a checking account here for two years can you help me get a credit card? You're out no now and I guarantee you by having a little bit of that personal interaction, they're more inclined to give it to you if you're in good shape if you don't owe any credit card debt and if you're you know relatively if you're in relatively good shape, maybe you don't have the history, but if you don't have a lot of credit card debt, you should be able to get a new credit card from your local bank if you've made that choice, I mean that's where credit union can help us well but if not again get the lowest rate card just and when you do get the car just start using it for very small purchases we've all been there where you have your credit card in your pocket do you think I really want that but I can't afford it but I can put on my credit card I've been there we've all been there I have a stepdaughter she's twenty and I know that sally you have a couple of teenagers would you suggest as a parental tactic to maybe secure a credit card for people in the inn that younger age group to kind of monitor and help them upside get some of their lending habits it's the best gift you could get them because they say absolutely so either get them a secured credit card or if you feel comfortable put them on your account I mean you have to feel comfortable and trust them and they're not going to go to nordstrom and just go on a shopping spree but and if you are nervous about that then get them a secured card absolutely but I mean in their name you know maybe they came in their national saying hey it's it's the best lesson you can give them it's absolutely I think it's such a great tool such a great gift if you will theater thing is if they have the cell phone you could but the cell phone in their name so get it off your plan if that's what it's on and really put the cell phone bill in their name again, you're running the rest of their goingto charge it up, but and then maybe you give them money to pay for it, but at least they're getting the cell phone bill in their name, which is a great tool also to help for parents, tell their kids quick question from the chat room. Jamie wants to know if sr has been have one credit card in both of their names same card number to physically separate cards. If they use her card more often, does that help build her husband's credit or what he need to use his actual card? Did you know? I think he just has to make sure that he's an authorized user on the card so what I found also just from a lot of women who got divorced, is while they had a credit card and they thought it was joined, they weren't an authorized user on the account. So that's, why, you know, and this is a little bit old fashioned, but a lot of women who maybe didn't work or home or stay at home, you want to make sure that you are an authorized user on the council, you're building credit in your name. So the question is that they're using her card the scene authorized user there's no discrimination here, we're helping the man at all, so, uh s so just making sure if the you sure it's a great, great question and most of us don't know the answers to this because we don't take the time tto learn this, you know? And we're not taught this in school, we're not taught about her, right? Isn't it ludicrous that were not taught our credit reporting credit history in college or high school or any kind of school that we go to? I mean, when you think about how essential it is to having your own business to buying a home to building security, so how do we know that that's? A great question. So over the break multi step process if you have never run your credit report or have you, if you have not done in in twelve months or more, run your credit report, get your fico score said to both of, you know, your fico score? Yeah, great, happy with it. Good also, how about you guys? And I know you don't know it. Okay, how about you, helene yes, yes to help me with I'm happy with okay good. Not a static okay happy? I didn't say that I sell your final e you know, I looked a while ago because we you know, we had to build it from scratch in five years I think it's okay, but I wouldn't okay, so run it by the brake. Okay, um run your credit report or you haven't done it in twelve months, so I think it's okay to do it once a year if your credit board has mistakes, make the time to dispute them and fix them and if you can't dispute them except that you can't and move on there's only so much you can control just don't let it control you think that's the point of this whole course is money is taking us over and we're scared and fearful of it and it controls us and it influences our decisions. So in this case of the gentleman who has disputed it and he couldn't fix it I'm so sorry that's happened to you, you've got to move on and you'll get past it and you'll do other things around it if your credit score is lesson you would like take actions to raise it, pay off your bill paid your bills on time, ask for limited increases become unauthorized user use it on a very small amount and pay off the bill every month get credit if you don't have it and as I mentioned here, use it for small, occasional purposes so you should still use it, but just use it very small purchases. And again, if you don't have a history, don't use the debit card so credit cards are good. They build your credit report, as you see, we need you just want to make sure that you don't accumulate that. References over different types of credit cards like visa and mastercard, american express her is a really, really good question. So I think you have to think about what is important to you. So I know for me I do love to travel, and so I have always been a slave to the frequent flyer cards. So I have to I have an american express, which lets me do anything. I mean, except for american airlines lets me do united and delta and continental, and yeah, you name it. So I pretty much, you know, a flop flown once or twice a year for me and my family for my family and I but then I also have an american airlines card, because when I traveled for work many years ago, I just started building that up because my company would only do american airlines. And then just and then I fly jetblue a lot because jeff flew has around that I like to go visit my parents so you know, selfishly I have an american express and a mastercard that's both and I really used them fifty fifty and I do have a work credit card that's also american airlines so I probably pay a seventy five dollar annual fee for all three cut for each card it's worth it to me. I have spoken to clients or like I will not pay a fee. A lot of clients want cashback that's a big thing with credit cards so you could get discover you could get fidelity. You could get barnes and noble you can get I have a client who uses an amazon card again I'm not promoting any of these companies are supporting them but she gets money towards the amazon because she spent she visor groceries practically and it was on so I really think it's what's important to you in that sense from chun li is saying, believe it or not I just called my chase piece of card to ask for an increase in my credit limit they said they can increase it after they run my credit report they did it I requested a four thousand dollar increase the whole thing was done in five minutes I wish I knew that earlier wait on I'm not saying that I'm shocked because I'm not but usually when I work with the client it's an hour session or we do in our seminar and I said okay, I'll see you next week I'll see you next month and then I have to wait I might get an email and they say oh going oh look what I did this is grain but this is after the fact I mean talk about instant gratification this is amazing so and see how easy that was really so I mean I can't stress that enough is that your showing up here today make you know do the homework to show up like by size pieces so I think we're going to start getting on budgets or do we have any other questions on the credit report before we get going now I think what more than ready for budget ok awesome so we're not going to be talking about debt and credit that much anymore for the next few days so if you have any more questions, let us know but what I want you to think about with debt and credit cause they can definitely hold us back so just kind of summarize that is have a plan to pay off your debt make sure you've got a credit score greta report clean up your credit it is so important for your overall financial health but don't let that hold you down because from now on for the next few days today in the next two days we're only going to be talking about the sky's the limit with our money we're going to talk about spending plan which I love spending plans I don't think of it as a negative thing I think of it is an opportunity for me to really control my money spent on what I want so I could do more with my life tomorrow we're going to start learning about investments and retirement plans which all of you khun do again the world it's our oyster in terms of investments wertheimer plans home finance will's the's are all wonderful things about taking care of ourselves so now that we've dealt with debt and credit which kind of could be a little debbie downer hold us down or really focus on the negative areas in our life, hopefully you've got some resolution around it you know what you need to do? You know the homework that you really need to do around that you can kind of put it behind you and move forward from where you are and so what I would suggest and I know that I'm you know sally and khalil are doing this on the chat rooms but think about your situation if you're really stuck with your budget, let us know I'd love to do some numbers with you you know especially you guys too, so let's talk about spending smarter plan, also known as a budget for feelings hers just on the budget because there is a little chat already we've given a call out and said that if you would like to send in your numbers, people are wondering what numbers you want. Do you want those four categories that you started the day with? So I would say with a budget number one, if you've got questions on your income, how to figure out your income because you're stuck on that don't let that hold you back, so give me some scenarios and how should I figure out my income? What I would suggest is look at their fixed expenses, and I will talk about that, but really just start putting some of those fixed expenses together. So maybe it's three thousand four thousand, five thousand, two thousand whatever. What are those numbers think about in terms of the budget? What do you need to work on in terms of your goal? Lt's so I'm going to keep harping on this, but do you need to save more for a rainy day or your emergency fund, like let's build a budget around that? Do you need to save more for retirement? I'll just put ira because we're not sure which ira, but we'll talk about that tomorrow. Or do you have a specific goal like a vacation? We're down payment or a coat or saeko because it's freezing and say we'll just go or a equipment did you want to say for some of these? So what is your income? How do I figure that out my fixed expenses? And then I'll tell you what you could spend on food and things like that with what's left over that's all right that's a little bit how you should think about it is that because the food part the clothing part, the taxis, you know, whatever is your you know, I say food cause that's usually the biggest thing where our money goes, we eat out or clothing or, you know, maybe you've got I mean, who knows what you're I would say vice, because it's by no means of ice but you know who knows where your a sort of hole in your pocket is we all have different holes in our pockets I mean, I have a client she said her husband is like a techno guy and just the stuff you order she's like, I don't even know it existed like the wires that come in and the boxes and um but what this is this is the part that sort of get system to trouble that doesn't let us do this and we get stressed about this, and we don't know what this is, but you can control this part on by controlling this part. This all sort of falls into place. This is a long time ago, the first year I was in business and learning about business deductions and what not, and dining and entertainment, but it was like a pretty big shock when I realized that I could only write off half of it of the dining, dining and entertainment I was like, what? S so, you know, and their introductions were definitely a funny thing, it's funny that you bring that up, because so my thing with deductions, I used to hear this well, you know, my accountant says I've got so many deduction, or I need to spend this money, otherwise I'm gonna have to pay taxes on it. Well, I'm going to be a little bit of a, uh, you know, a little bit of a controversial person, and I'll say I'd rather he paid taxes on that money and put the rest into savings that spend the money on something that you might not really need and not pay taxes. So say you have an extra thousand dollars, and your accountant says what, you better spend that thousand dollars so you don't pay taxes, I'd rather you spend seven hundred is, maybe you're paying thirty percent taxes remember you excuse me, you spend three hundred on taxes, so you are giving it to the government, which I know not everybody wants to do. But then guess what? You've put seven hundred into savings rather than spend a thousand on business dinners or a new computer that you might not need if it's truly something you need absolutely spend it, but very often we trying to spend those last minute expenses because it's the end of the year and we want the deduction, you know what? Pay the taxes and put the money into savings. Really, you are paying yourself me? If you don't want to pay taxes, then you have to look for other deductions that maybe makes sense. Maybe get a better handle where your money's going, so but it is a great point. They're like, oh, this is a business deduction. I can do it. This is a business expense. You're still spending the money it's just before tax or after taxes. Okay, you're spending smarter plan I created like why is it so important? So I have worked with so many artists over the last eleven years twelve years old, three freelancers and artists. And I cannot stress that enough that maybe you've been watching this and you been sort of on the couch thinking, you know, this is important. Sit up. This is the time when you need to focus, like you need to focus on the death of credit, but this is I love this picture. This is the foundation of healthy money habits. Your house cannot be built. Your house, in terms of your healthy financial life, cannot be built until you focus on your spending plan, and I love my spending plan. My spending plan lets me know. Can I go out for dinner? Can I buy a new outfit? Can I buy new shoes for my daughter? And I also saving for my vacation, and I also saving from my ira, and I actually don't have to think about it once I've said the systems into place.