Build Credit Scores WITHOUT More Debt | Step-by-Step

Hey Credit Heroes, one learn how to build your credit score without taking on more debt. Well, today I'm going to teach you exactly how to do it. And I'm going to reveal the secrets of nontraditional credit. So you better stick around. So the big question is this, how can we take our passion for helping people with their credit, and turn it into a successful business? Without taking loans without spending a fortune by bootstrapping it from nothing? So we can help the most people and still become highly profitable? That is the question, and this podcast will give you the answer. My name is Daniel Rosen, and welcome to credit repair business secrets. 

If this is your first time listening to my podcast, every week, I give credit repair tips and advice on bootstrapping your business from nothing. So be sure to click subscribe now and get ready to start changing lives. Okay, let's get into this. It's probably not surprising when I say that the credit system is complicated. If you want credit, you need credit. But you can't get credit unless you have credit. If you use too much credit or not enough credit, no lenders will trust you with credit What the fuck all this complexity brings confusion. But it also means that there are millions of loopholes and little tricks that you can use to work with the credit system. Now most people think the only way to build credit is to borrow make payments and stay in debt forever. But that's not true times are changing. 

There are traditional and nontraditional ways that you can build credit without taking on more debt. And today I'm going to teach you exactly how to do that. Here's how this relates to us. For those of you still new to credit repair. Credit scoring is a system that lenders, creditors, landlords, and other entities use to evaluate your creditworthiness credit scores range from 300 to 850. And the higher your score, the better your credit standing. If you need a more detailed breakdown of credit reports and credit scores, you can download my free guide book seven simple things to increase your credit score, and I'm going to drop the link over there in the show notes. 

Here's the thing to remember, credit scores are calculated using five separate categories that each way differently on your score. Payment History is 35% of your credit score, credit utilization or amounts owed is 30% length of credit history is 15%. New Credit is 10% and credit mix makes up 10% of your score. With few exceptions. This data makes up your entire credit history and your credit profile. If you don't have enough data or enough Wiesen data in your credit profile, you have what is considered a thin credit file and you're considered credit indeterminable or credit invisible. Some people prefer to be invisible to the banks and bureaus and who can blame them? But having no credit history makes it almost impossible to get approved for new lines of credit. So unless you have the means to buy cars and homes with cash, you'll still need to build some credit. 

Here's why this is important. You can't use credit unless you have debt had debt or add debt. But not all debt is bad if you review your finances and you determine that borrowing a reasonable amount is for something of long-term value like your education, health, or a business investment. That's an example of good debt. Bad debt is when you spend money you don't have on items that quickly lose value like cars, clothes, or appliances, and you finance them using credit cards or payday loans with ridiculously high interest rates. Some economists say that you should avoid debt and save until you can afford to pay everything with cash. But paying with cash isn't a realistic option for most people. I don't know if you've been watching the housing market lately, but here in California 330 square foot homes are selling for a million dollars. going into debt is a fact of life it's usually unavoidable. But if you're lucky enough to have a choice, you can still build credit without adding debt. 

Here's what you need to know. I'll start with the newest and most exciting option. You can use nontraditional credit last year in an effort to support equitable access to credit for more consumers. Experian, Equifax, and TransUnion announced that they would begin allowing rent payments to factor into their credit report calculations. Mortgage giant Fannie Mae also announced that they would begin accepting the use of nontraditional forms of credit in their loan applications. So this means if you pay your rent on time and in full, your positive payment history will help to boost your credit score without adding any new debt. However, this policy is still new and it's not perfect. As of now, if you want to pay your rent payments to influence your credit score, you will need to enroll in a rent reporting service. Now, most of these services require a monthly fee, because you pay your rent to them, they process your payment, they transfer it to your landlord, and then they report the payment to the credit bureaus. Now, I'm not going to recommend any of these rent reporting services just yet. But I'm going to do an episode soon where I share my thoughts and I'm going to rank the top five. 

Now another way you can build your credit without taking on any debt is to review your credit reports and remove any errors. 79% of credit reports have errors, and these errors can cause major drops in your credit score. So you want to carefully review each report from each of the three bureaus and start by confirming that all of your personal information is up to date, and accurate. And next thoroughly check the details of any negative items that appear on your credit report including late payments charge offs collections, accounts listed as settled, paid, derogatory, or paid charge, and if any of those items contain errors, dispute them with the credit bureaus most negative items can only appear on credit reports for limited time, typically seven to 10 years. If a negative item exceeds its time limit, but still appears on your credit report, dispute it with the credit bureaus, you can review your credit reports and remove the inaccurate information yourself. Or you can hire a credit repair professional to do it for you. Either way, you will improve your credit profile without adding any debt. 

But the best way to build your credit without taking on more debt is to establish healthy financial habits. Let's say you already have a good amount of debt. And if that's the case, you need to get your credit utilization below 30% credit utilization means the amount of credit that you're using compared to the total amount available to you. Lenders use this ratio to determine if you manage your credit responsibly or if you overextend yourself, and it has a huge impact on your credit score. If your balances exceed 30% of your credit limit, pay them down as fast as possible. For example, if you have a credit card with a $10,000 limit, you should never use more than $3,000 at any given time, even if you pay your account off in full each month, and this little trick will boost your score. Now you might be tempted to close old credit card accounts. But don't do that. Old accounts demonstrate your long-term stability and payment habits and closing old accounts shortens your credit history and actually hurts your score. So keep those old accounts open and use them sparingly to grow your positive credit history. If you don't want to use an old credit card, cut it up or hide it away in a drawer, but keep the account open. Your credit score will thank you. 

Beyond this check your credit reports regularly for any new errors or fraudulent activity. And this will help you spot issues, maintain your score and protect your long-term financial health. And here's my final point. You don't need to borrow money and live in debt forever in order to build credit and boost scores. The credit system is complicated, frustrating, and slow to change. But it's already adapting to our new economy, and you can adapt to it. So learn the tricks and trends and you'll reach your goals. 

And just a reminder, this podcast is brought to you by Credit Hero Score. Credit Hero Score is the only credit monitoring service that integrates directly with Credit Repair Cloud get instant access to your credit reports and scores by signing up for a seven-day trial for only $1 Sign up right now at creditheroscore.com. 

And now for my favorite part of the episode. Every week I feature one of our Credit Heroes inside our credit repair cloud Facebook community so that you can see firsthand what real people are doing as they run and grow their businesses. And today's spotlight is on Cory Harris, Cory posted a huge win in our credit hero Facebook community. He shared that he was able to close on his own home this month because of the work he had done on his own credit. But Cory isn't just improving his own life. He said I have helped more than 50 families to close on him. Holmes, we change lives. Congratulations, Cory. Being a Credit Hero is all about learning about credit. And using that to change lives for your family and your community. And I can't wait to see what else you do, you got this. 

And I'll end by saying, if you don't already have a credit repair Cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30-day free trial at creditrepaircloud.com/freetrial. And if you'd like to change lives and grow your very own credit repair business, check out our Credit Hero Challenge. It's a live experience that has helped tonnes of Credit Heroes to get certified in disputing and gain confidence as they run their credit repair business on a solid foundation. So they can change a lot of lives and make a great living in the process. We're starting the next challenge very soon. So you want to join before the doors close, are you gonna have a long wait until the next one? So sign up right now at creditherochallenge.com. If you're finding value in the things that I share on this podcast, click below to subscribe and follow. 

Also, give me a five-star review or share the show and help me to change more lives. If you'd like to read the show notes, they're posted on my blog. If you have a question or a comment, drop it down below because I read each and every one of them, and I would love to hear from you. And I'll respond as soon as I can. If you want some easy tricks to boost credit scores, check out my Episode How to delete negative items instantly. So take care credit hero and keep changing lives. Hey, everybody, it's Daniel again.

And really quick, I'd like to invite you to join what I believe is the best thing we have ever created inside the credit repair cloud community. And it is a challenge that we call the Credit Hero Challenge if you're just planning out your business, or you're just getting started, and you dream of having a successful business of your own. So you can quit your nine-to-five and fire your boss and have financial freedom or so you can add another revenue stream to your existing business. If that's your dream, you need to get into this challenge. We created this challenge to help you to create and launch your very own credit repair business to build a proper foundation for a really successful business. This challenge is going to help you to understand the strategy, the tactics, and all the things you need to be successful at credit repair. It really is the greatest thing we have ever built, and it will change your life. So I recommend you do it right now. Stop everything pause this audio go online and go to creditherochallenge.com. That's credidherochallenge.com and join the next challenge. And there's a challenge that starts in just a few days. So go get started right now at creditherochallenge.com