Quick Ways to Improve Your Credit Score
Now I mentioned, I'm gonna give you the secret recipe, for quick and easy ways to improve your credit score, 'cause like this says, we all love stories like, 10 Habits of the World's Richest People. or 5 Tricks to Make You Her Best Lover. We all love click bait titles. So this is my 3-Step Process to a Mind-Blowing Credit Score, is what I'm gonna call this. And the first step, and we are using a credit card to do this. Keep in mind, everything else, if you have loans, is just always making the payment on time. That is the strategy there, but if you want a quick and easy recipe, it is related to a credit card. You have a credit card, you make one or two small purchases a month to keep that utilization ratio nice and low. We wanna be kissing 10% or below if you can. So like I said, if you have a credit limit that's really low, $250, $1,000, seriously, just one super small purchase. It could be buying something you need. It might, even a tank of gas might be too much if you only have a $2...
50 limit. So just think about something small like I said, that Netflix or Hulu or any sort of reoccurring thing like that, if you're the one that's paying for it. 'Cause let's be honest about what people do with sharing passwords, and you want to make sure that you're not over spending at all. So keeping the utilization ratio low. Step two, pay it off on time and in full, my favorite line. So it's keeping utilization low, paying off on time and in full every month, rinse and repeat, it is that simple. So you're using a credit card to build your score. You're keeping that utilization nice and lean, definitely under 30%. If you can get close to the single digits that's best. Every time that statement comes in, you're paying off what exactly it says, the full amount, and you just keep doing that. And very quickly you'll start to see it rehabilitating. So I mentioned earlier about my husband having that item go to collections. He called, he paid it off, and then starting doing this. He actually, at the time, didn't have a credit card. He was building his credit history with an auto loan, and with student loans. So I had him apply for a secured card, as she just asked, and he just made one very small purchase every single month, and within a year, he was already back into the 700 range. Now part of that too is that he did have loans in the background that he was making on time payments for. So he had good diversity of credit. But if you are just starting to build, or rebuilding, you will start to get much closer to the 700 range, usually within a year. I can't promise how quickly it will happen, but typically within a year, you start to see very healthy, good progress, towards getting that 700 score that we all want. So getting access and free access, because lets all admit, we've always liked to be able to get things for free, to both your credit reports and score. So first, your credit report, you are entitled by federal law to get a copy of your credit report from each of the three bureaus once per year. Now the three main credit bureaus are Experian, TransUnion, and Equifax, and they are all collecting all of this data on you. One thing that is good for you to know, is that a lender does not have to report to all three bureaus. So you might notice that you pull Equifax, and it actually doesn't have every credit card and every loan. Or you might pull TransUnion, and it's got one of your credit cards but not all three of your credit cards, but then it's 'cause they might report to Experian or Equifax. So that is something to know. Don't panic if you just pull one copy, and you're not seeing everything on there. If you pull all three, that's how you should see all the information about the loans that you have out. The easiest way to get access to your credit report is to go to the government-backed website, annualcreditreport.com. You will never be asked to put in credit card information. You should not ever have to pay for your credit report if you are getting your one free annual report. You only get it for free one time. You can do all three of them at once, from all of the bureaus, or you can space it out. I kind of like the idea of spacing it out, because it's also a good way to detect fraud. Pulling your credit report, you can see if all of the information being reported is correct, or if anyone has tried to open up a product in your name. Another reason it's important to do this, is if you have either a common name, or if you're named after a dad or a grandpa, or a mom or a grandma. You might have somebody's information reported on there that's not you. Doesn't happen all the time, by any means, but every so often, there's a glitch in the system. I've even heard horror stories about people being declared dead when they're not, because they had a common enough name that something wonky happened. So that's why it's a good idea to do a nice check in, make sure everything looks good. And if you had all have been a recently a victim of identity theft, this is a good time to get in there, and make sure that people are not applying for products in your name. Now I mentioned earlier, there's more than one credit score and model. Even FICO has a bunch of different models. Financial institutions can also create their own model form, so that's important to know. When you're pulling a FICO score, generally people are either using FICO or VantageScore. It's just two different credit scoring models, and usually if you're seeing it on, let's say your credit card, if that's where you're getting your information, typically no matter what the financial institution is using, it's somewhere within that ball park. It might not be the exact number, but it's usually within the range. And if they're seeing something really different, have a conversation, be like, hey here's the proof that I'm this at this place. My credit card says I have a 780, why are you saying I have a 710? And it might be information about how they pull, and what their model is. That's another reason it's important not to get so stressed out about what your score is reported by one particular place, 'cause different places do tweak it and have, they might weight things a little bit differently. They might pull information slightly differently. Getting free access to your credit score, credit cards now are a great way to do this. It started maybe about eight years ago, that you started to see them on your credit card statement. You might not have ever noticed before, depending on the credit card you have. That might be a perk that you are unaware of before. So you can actually pull your statement up on your computer, and Control + F, for the word credit score. It might take you to the part of the webpage where it shows it, maybe at the very bottom. Sometimes on your actual statement, if you download the PDF, it shows it at the very top. Free credit score websites include Credit Karma, Quizzle, Credit Sesame, Credit Scorecard, and CreditWise. Credit Scorecard is linked to Discover. CreditWise is linked to Capitol One. You do not have to be a customer of either of those banks in order to use that particular product. Big caveat I'm about to throw in here though. If you use any of those websites, they're free, but they got to make money some how. The way they are generally making money is advertisements, and some of that might be an email blast that you get into your inbox, that says something like, hey you're at a 680, you're pre-qualified, or you can get access to XYZ card, or XYZ loan. They are not pitching you, necessarily bad products, that's not what I'm saying, but it might not be the best product for you. So before you pick a product based on something recommended by one of these websites where they definitely are getting a kick back if you apply for that product and take out that product. Just do some comparison shopping, do some digging, make sure that that's the best fit. So just know that if you're gonna use those kind of websites, you're gonna get some ads, but it's free. So we can't have everything right? Now if you pull your credit report and something isn't accurate, if you died that's a real big fight. I'm gonna say right now, but if it's something like, mis-information, or maybe dad's information's getting reported on there, or somebody applied for something, and it definitely wasn't you, there's a few different things you can do. First thing is dispute the item with the credit bureau. You can do this online through a portal. You can do it via snail mail. Sending something via certified mail might be a great idea to confirm that they received it, but it's your choice if you want to do that. They have 30 to 45 days to respond. Next things that are important to know is about fraud alerts and a credit freeze. If you have been a victim of identity theft, or if your information was compromised in a recent security data breech, it might be a great idea to put either a fraud alert, or a whole credit freeze on your report. The difference is with a fraud alert, you're basically just telling a potential lender, hey my information has been compromised. So the person that's applying, might not be me, do a little bit of extra digging. You're really putting your trust in a potential lender to ensure that that person is who they say that they are, that it is actually you and not some scammer. A freeze locks it down. With a credit freeze, no one can get access to your credit report unless you thaw it. So you're given a special pin when you freeze it. It's a long digit, I think, I'm gonna say maybe about 10 digits, I don't totally remember off the top of my head. I did freeze mine recently. But it's a long digits that you want to write down and keep in a safe place, because if you want to go file your report, you need that information. And if you want to say, apply for a credit card, but your reports are frozen, what you'll do is you'll call the credit bureaus and put a thaw on it, and then get a one time access for a potential lender to check and pull your report, and then otherwise it stays frozen. So if anyone else tries to apply for credit in your name, it gets, basically, bounced back unless they have the pin, and trust me they are not guessing your pin. So that is a great way to put it on lock. It could cost you money, depends on your state, different states have different metrics for how much it's gonna cost. Usually about 15 bucks per bureau, and it also depends on if you've been a victim of identity theft or not. If you've filed with the FTC, and if you've filed a police report and have that information, and you can prove you've been a victim of identity theft, generally you can get a fee waived. I'll say even if it's a $15 fee, to me that feels worth it for the security of a freeze if your information has been compromised. It's for me personally. We are going to get into some true or false, debunking myths. So before I get into this, do we have any other quick questions before I dive into this section?
Yeah go for it.
Very quickly on your last slide, I was wondering if any of those courses of action, if you thought there was some sketchy activity going on your report. Can any of those course of actions impact you negatively on your other report or score? By maybe saying I'm irresponsible with my information. I gave it all away to someone.
No, I've not seen that. I've had my reports frozen for about a year now, and my score has just gone up. So that's not been a personal experience, and I think they also understand that data breaches are a new reality for us. So that's generally why it's been compromised, not 'cause I kept my Social Security Card in my wallet and somebody stole it at the bar. That's not really usually the case anymore. Any other quick questions before I jump into this?
Yeah, Mr. Linch who's very active. Thank you Mr. Linch.
Yes, thank you.
He says, I look at my credit report, and I see accounts that say they are active, but he says, they shouldn't be. Called the credit card company, confirmed no account is open. And it says congrats you are debt free, which he's not. So the question is what is the best way to make sure that all the information on there is actually correct?
So first I would wonder where you're pulling it from. If it's a report on Credit Karma, for example, first I would go to annualcreditreport.com. Go to the government-backed website and pull them all directly from Experian, TransUnion and Equifax and see what those say, 'cause those are the real credit reports. And if there's mis-information on there, you do need to get in touch with the credit bureaus and dispute it, or it sounds like it's almost positive information, but you still wanna make sure the information is accurate. So be sure to reach out to them, dispute it or say, hey something's up this doesn't make sense to me, this isn't actually my information. 'Cause perhaps whatever you're looking at is pulling a different Mr. Linch.