Today, we’re going to talk about 10 ways to improve your credit score in 2020. What do you mean improve my score in 2020? The year 2020!… It’s only 2019…
If you watch my videos, you know that psychology’s my background. That is what we’re going to talk about today.
When I say 2020, we are halfway through the year currently right now, guys. We are halfway through the year, and you’re still in the 500 credit scores.
So I’m going to ask first. Why? Go ahead and answer that.
Why are we still in the 500s, and we are halfway through 2019?
Because what happened was, when you had a New Year’s resolution to fix your credit, you didn’t follow through.
Most people fail within the first three to four weeks of January.
And then what happens is, time goes on, life happens, kids happen, job happens, and here we are halfway through 2019, and the credit is still in the 500s, and that’s unacceptable.
What we’re going to do, we’re going to change our mindset. And we’re going to put a couple of steps into play right away, so that way in 2020, you can be a different person and have your credit score ready.
I want you guys to dream big now, not later.
When I say dream big now, if you guys are looking to buy a house, if you’re looking to maybe get a new car, if you’re looking because you just want a loan, maybe you’re trying to start a business, maybe you want a couple of extra credit cards, you’ve got to start putting that down today.
Also, I’m going to share with you today some FICO tips.
As long as you know the FICO tip, you’ll know the simple ways to actually increase your credit score, and you’ll know exactly what they’re looking for. Let’s start with number one.
You’ve got to know your financial goals. Again, I’m going to share this with you again.
Is it buying a house in 2020? Maybe it’s this year. Is it getting a new vehicle? Or do you want maybe a couple of credit cards extra? Maybe you’ve got the small credit cards. You’re looking for something for a higher credit limit.
Whatever the case is, you guys got to know your financial goals, and that’s the first tip for you, is knowing what your goals are.
I know you’re going to watch this video 100 times, and I definitely implore you to do that because what happens is people watch videos and they don’t take action.
Oh, man, Mike, that was a great video. Really, really liked your video. But your credit’s still in the 500s.
So take what I’m saying, and while you’re watching this video, if you have to pause it and go back, there are 10 steps. If you have to pause it and go back and write this stuff down, if you have a vision, you’re going to be able to get there.
But the first thing is knowing, dreaming, and saying, “This is what I’m going to do, and nothing’s going to stop me.”
The second thing is you’ve got to know your financial situation.
Know how much your income is currently. Making sure your bills are paid on time every single month is the absolute game-changer.
There is no silver lining, or whatever you want to call it, the silver bullet, in credit.
But I can tell you that 35% is made up by you making your payments on time every single month. And you missing payments is crushing your credit score.
So my first tip is you guys got to know how much money you’re making, and then the leftover money at the end of the month, that needs to be allocated towards your goal.
If your goal’s the house, if your goal’s the credit card, or maybe you’re getting a new vehicle, you’ve got to allocate some of that money towards that investment that you’re thinking about and getting in 2020.
But the plan starts today. It doesn’t start in 2020 because then we’re going to have this conversation in July 2020, and you’re going to be in the same place.
Take action today so we can have 2020 a good year, starting off in January with your dream.
Number two is you’ve got to know exactly where you’re at there. And you’ve got to know what you owe.
Number three is you’ve got to know what you owe. So take a look at your credit limits, and take a look at your credit debt.
If you’ve got, for example, a few credit cards, $10,000 credit limit, $5000, and $2000, you also want to know how much you owe.
What is the debt on those credit cards? Because we want to keep it under 30%.
Now primarily you want to keep it under 10%, I mean, to be excellent. But I’m okay with 30%.
If you guys are just getting started out, I understand that you have $10,000 credit card, and you owe $7400, you’ve got a 74% utilization now.
But attack that card first. But getting it to 30%, I get it, is a chunk.
So we have to get a plan together so you can start making payments today, and maybe making a little bit extra payments.
But you’ve got to know. If you don’t know, how are you going to do it? Right?
But you’ve also got to pull a credit report. And legally, you’re able to have freeannualcreditreport.com once a year.
Now it’s not going to give you the credit scores, but it will give you a comprehensive credit report that you can get once a year.
If you haven’t got it this year yet, it’s freeannualcreditreport.com.
You’ll be able to see what you owe exactly. Now a tip here is comb through your credit report.
Print it out and circle all the things that are not yours.
If you believe it’s not yours, inaccurate, maybe it’s something that you’re like, “That’s not mine.
I never applied for that. These aren’t my inquiries. This is not my account.” Who knows? You could’ve been a victim of identity theft.
That being said, circle all the information on there that is not yours, and then dispute the information with the credit bureaus.
We’ll talk about that in another video.
But for right now, you’ve got to know exactly where you’re at. It’s like this.
I want you guys to drive to 2444, 2444, Able Mabel Road in Tulsa, Washington.
Now in order to get to that location, if I just tell you that, you’re going to say, “Well, let me put the GPS.
Let me put it in my GPS. Let me figure out where I’m going.” If you don’t know where you’re going, and you don’t have a clear vision and say, “Hey. I’m getting a car in 2020. Or I’m getting a house in 2020,” there’s nothing to look forward to, so you have no clear direction as to the outcome.
That’s why writing stuff down is so important because, again, I watch videos for hours a night.
But if I don’t take keynotes and write things down, how am I ever going to remember the videos I watch?
Writing stuff down and going back through the video as many times as possible is going to be your kicker.
You could also, you guys know that My FICO is probably the most accurate.
If you’re looking for scores, myfico.com will give you the scores.
And then probably the least accurate obviously, is probably the Credit Karma, which is the Vantage 3.0 scoring model.
Not my favorite, but it is free. My FICO probably costs 20 bucks a month, but at least you can get the scores.
But if you’re just looking for a comprehensive report, the most accurate, freeannualcreditreport.com, that way you can circle all the things that you believe are inaccurate or reporting an error, and then we can challenge those.
Number four is part of the same thing. It’s knowing your score. Right?
Not just knowing your report, but knowing your score. Guys, if you’re at a 550 credit score, and you’re looking to buy a house, you know that FHA and conventional loans are looking for right around the 620 mark.
You know where you’re at now, and you know where you’ve got to get.
What do we need to do to go from 550 to 620 so we can get that?
What do we need to go from 550 to get to 680 so we can get a new vehicle with a decent interest rate, and not have to put down $5000 to get a 24% interest rate and pay a $550 car payment when you could be paying $289? Right?
You have to know where to go, and kind of where you’re at today, and where you’re going.
Again, don’t just say, “Okay. Yeah. This is where I want to go.
I want to get a car in 2020.” Write it down what exactly your goal is, that your dream is for 2020 in the beginning, and then start taking action today.” Number five is you’ve got to know what’s important when you’re looking at your credit report.
First thing you have to look at is knowing that 35% is going to be your payment history. 30% is going to be your utilization. 35%, how much you pay on time, the most important.
Second, followed by don’t max out your credit cards. Credit cards are not used to max out. They are used to build credit.
Maybe we get a side hustle to increase our income, so we don’t have to live off credit cards. Right? Wink, wink. Good idea, great.
You have to know what that is. 35% utilization, 30% is going to be. 35% is your payment, 30% utilization.
Your mixture of credit’s 15%. Your age is 15%. You guys need to know exactly what is accounted for on your credit report, so when you look through it you know, okay, well, these are the most important.
Obviously, your mixture of credit is not as important as something like payment history, which is 35%, which could drop you from 700 to 550 in 30 days if you miss payments.
So that’s how important that is, knowing the importance of each one of them.
Number six is you’ve got to know your credit card balances.
Now I know we kind of talked about this a little bit, but this is so important. Guys, this is 30% of your score.
You have $10,000 credit limit, and it’s at $6500 is what you owe on it, you’re at 65% utilization.
Your score is tanked just because of that one credit card. What I would do is if you owe $6500 on a $10,000 credit card, what you can do, transfer the balances.
Transfer that balance and divide it over some other credit cards.
It’s better to have three or four different cards at 30% than five cards paid off, and one at 80%. Let me say that again.
It’s better to have one card with about 30% across all your cards than all of them paid off, and one at 80%.
That’s what you want to try to do is spread it out. Balance transfer. Call the bank. Say, “Hey. I want a balance transfer $2000 onto this card, $1000 on this card, $1000 on this card,” so you don’t owe $6500 on one.
That example right there is going to save you and boost you up significantly really quickly.
Number seven, you have to know when to apply for new credit and when not to. A very important tip here.
You guys, listen, you’re driving past … Well, first let me share with you what FICO, and this is really something that is a newer tip.
As far as looking for a home or looking for a vehicle, the new FICO scoring model actually counts them as one.
I know you’ve probably heard this before, but it is actually true in 2019 that if you go home shopping or if you go car shopping, they condense the inquiries into one inquiry.
So you go out to BMW, or Mercedes, and Tom Bush, looking for whatever the case is, Lexus, they’re all going to put that into one group of inquiries.
They’re not going to charge you 15 different inquiries. The same thing with home shopping, going to different lenders, FICO categorizes it into one, so that’s an important tip there.
But know when not to add new credit to your credit score.
Every time you add a new account, think about what you’re doing. 10% of your credit score is based on new accounts.
So as you add new accounts, what happens? Not only do you add a new account, which is going to hurt you, but you’re also diminishing your total age.
If you’ve got a bunch of accounts that are a year or two years old, and you add a brand new one, that brand new one is factored into the overall age, and it’s going to drop your age because it works on average age.
So know when to get a credit card, and when not to.
If you don’t need credit, don’t get credit. It’s not like a game. This is not a hobby. This is how you have to build this. You have to know how often I should get a credit card.
And the golden rule is right around three.
I say this every six months, you can apply for three different things. That’s about a golden rule.
I wouldn’t go much more than that because you want to keep your inquiries low and not tear up your age.
And that goes into number eight.
Number eight is the length of the account. This is the glue to your credit report. Knowing the age is very important. Lenders want to see, most lenders like to see 24 months.
Now that’s not saying you can’t get a credit card with less than 24 months of average age.
But lenders like to see about 24 months of perfect payment history. So you go and apply for a bunch of credit cards, now your history’s at .7, and it’s diminished significantly, and they see you as having new accounts.
If you look at your credit report, you’re going to see this. The average age of accounts is low.
Mine’s at 5.8 years, and they’re still saying it’s low. I’ve got accounts on there that are 40 years old.
But because I have 40 accounts or more, what’s happening is it basically diminishes the oldest account. The accounts are then factored into the total amount of age.
So your average starts to go down by the more accounts you get. If you don’t need to apply, don’t apply just for the fun of it.
Stay away from those credit cards that are high-interest rate that they give you at stores like Kohls and some of the JC Penney’s and stuff.
Those ones typically are going to be the higher interest rate and lower credit limits.
They are great for building credit if you don’t have any credit but don’t just get them to … If you’re trying to raise your credit score, don’t get those.
Now one exception to that, the one exception to that, what I don’t want you to do is, I don’t want you to get new credit and close any old accounts.
This tip right here is, a lot of clients come to you, and they say, “Look. What do I do in a case like this where I don’t use the card? I don’t need this card anymore.” And I’m like, “Well, listen.
This account that you have, because back when you opened up your Sears account in 1994 is the glue to your average age. It’s the glue to keep your credit score where it’s at.
You close that account down, you’re losing 20 some years of history.
Even though you don’t use it, even if it’s an open or a closed account, it counts in consideration of your score for the average age.”
So do not close unused or accounts that are old, that you’re just not, whether it’s closed or open, don’t close the oldest account.
If you’ve got accounts that, some credit cards now that have a high-interest rate, or maybe the credit cards have a high annual fee, the exception would be to close those down if they’re brand new because they’re costing you 75 to 100 bucks a year.
Some of them have very high annual fees. With the exception of those, you might want to close those down if they’re brand new. It’s not going to hurt you.
But keep the oldest account, guys.
Two ways that you can beef up your score, number nine, two ways you can beef up your score right away.
Number one is to know that, let’s say you need a few points, what you want to do is check your mixture.
This is 15% of your credit score. Check your mixture to see. Do I have a revolving? And do I have an installment?
A couple of things that are installment, student loans, regular loans, house payment, mortgage payment, and car.
Fixed payments, that means installment.
That means the same payment every single month. Revolving typically is a credit card, different payment each month depending on how much you use.
That being said, if you have three or four credit cards, but you’ve never had a mortgage, and you’ve never had a car payment, or maybe even a student loan, then you would probably want to get one of those three.
That’s going to instantly increase your credit score because of your mixture. That mixture’s not there.
Maybe you have student loans, or maybe you’ve got a car you’ve been making payments on, or maybe you have a mortgage, and you don’t have any revolving, which is the credit cards, then now you can apply for credit cards, and that will actually increase your credit score because you’re hitting 15% of your score, which is the mixture of your accounts. So look at what you have, and get the opposite.
And here’s number 10, and I’m going to leave you with this one. Number 10 is you want to look at what not to do on your credit.
And we have found this to probably be number two.
Number one, what not to do obviously is you don’t want to miss your payments.
That’s the number one most important thing about your credit score. But right behind that is a cosigner.
And what a cosigner means is you had maybe a friend or a family member, typically it’s a family member, they went to go get a loan. And what happened?
They couldn’t get approved, so they call you up, you as the mother or father, and they say, “Hey. I’m trying to get a vehicle.” And they’re asking for a cosigner.
But remember what’s happening here. It’s because they were not creditworthy to get the vehicle is why they’re calling you.
So you better know this person really well and trust this person’s going to be able to make payments because you are on the hook just as much as they are.
They miss one payment, one late payment, you’re not going to be able to get out of this because it’s going right to your credit. It’s called piggybacking.
Same thing as adding in an AU. Think about cosigning as triple check it, make sure you trust the person.
Make sure they’ve got good income and they are responsible because again, the car dealership didn’t think so. I’m going to leave you with that.
Go back through these 10 tips as many times as you need to.
Write them down, guys. 2020, I want it to be super special for you guys. But you’ve got to have a dream.
You’ve got to have a vision, so go back, write these down, follow the steps.
Anything that’s on here that you have questions about, post them in the comments below. I’ll make sure I get them answered for you.
I want to make sure that I help as many people as possible each and every day.
Until tomorrow, take care.