Do you want to learn to boost credit scores in five minutes?
Well, on this week's Podcast, I'm gonna show you exactly how to do it!
You can do it yourself or hire a Credit Repair professional. Either way, the basics remain the same. Like fixing your car or doing your Taxes, investing in a pro can save you a lot of time and money, but learning how to do it yourself is cost-effective, and you acquire a valuable new skillset!
In fact, most successful Credit Repair professionals begin their journey by boosting their Scores. They decide to help their friends and family do the same. Then they turn their skills into a profitable new business.
Considering 79% of Credit Reports contain errors and 40% of Americans have scores below 700, those skills are needed now more than ever!
So, whether you do it yourself or hire a professional, the important thing is you take action toward a better Credit Score and a brighter financial future.
HOW THIS RELATES TO US
If you choose to Repair your Credit yourself, you'll need to get comfortable reviewing Credit Reports, identifying errors, and mailing dispute letters to the Credit Bureaus. And depending on the circumstances, you may need to file complaints with regulators or enlist the help of an attorney.
If you hire a Credit Repair Professional, they can handle the entire process for you, potentially achieving better results faster. But do your research and pick a reputable company. Stay away from scams promising quick fixes.
Even if you don't plan on buying a house, getting a loan, or building a Credit Repair empire any time soon, you should still be working to improve your Credit Score! A higher score means it's cheaper to borrow money. You have more purchasing power and more negotiating power with lenders.
Whenever you take out a line of credit, your repayment interest almost always depends on your Credit Score. The better your score, the lower your interest rates and the more money you save.
For example, if you apply for a mortgage and have good credit, you generally get an interest rate of 1.5% LESS than somebody with bad credit. This means on a 30-year mortgage, you save TENS of THOUSANDS.
So, now that you know the benefits of having a good Credit Score, let's talk about Credit Score GOALS and how to achieve them! If I move fast, don't worry, I put all this info in a guidebook that you can download for FREE at 7 Simple Things to Increase Your Credit Score.
THE THING TO REMEMBER
Credit Scoring is a system that lenders, creditors, and other organizations use to evaluate your creditworthiness. The most commonly used scoring model is the Fair Isaac (FICO) score, which ranges from 300 to 850.
The higher your score, the better your credit standing. Here's a breakdown of the different Credit Score ranges and how they're graded:
300 - 579 is considered POOR
580 - 669 is FAIR
670 - 739 is GOOD
740 - 799 is VERY GOOD
800 - 850 is considered EXCEPTIONAL
FICO scores are calculated using five categories, each weighing differently on your score. Payment History makes up 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.
The three main Credit Bureaus, Equifax, Experian, and TransUnion, use the FICO model to build your Credit Scores. Unfortunately, they sometimes have different information, which results in three different Scores. This is also why we must dispute each error individually with the three Bureaus.
Now, you might be wondering, "Do I need a perfect 850 Credit Score?"
Well, according to recent FICO statistics, only about 1.6% of the 232 million U.S. consumers with a Credit Score have a perfect 850. It takes years of hard work to reach it and extreme discipline to maintain it.
But the truth is you don't need a perfect 850 Credit Score to achieve financial success!
According to Ethan Dornhelm, VP of FICO Scores & Predictive Analytics, "To lenders, a consumer with a score in the 800s is a sparkling applicant."
So, from the standpoint of qualifying for credit, it doesn't matter whether you have an 850 or a score just below it.
WHY THIS IS IMPORTANT
FICO scoring data shows that a 760 Credit Score is the minimum needed to be offered the best interest rates from lenders. Some experts say a Credit Score of 780 is the target to hit to get the best available rates.
But whether it's 760, 780, or 800, there's one Credit Score fact everyone agrees with…the higher, the better! So no matter your Credit Score, any opportunity you have to boost it, you boost it!
WHAT YOU NEED TO KNOW
You can do a ton of Simple Things to raise your Credit Score.
First, Review Your Credit Reports and Correct all the obvious Errors. 79% of Credit Reports contain errors. So, carefully review your reports, look for inaccuracies, and dispute them immediately.
If you still need access to your Credit Reports, you can request free copies from each of the Credit Bureaus at AnnualCreditReport.com.
Start by confirming that all your personal information is up-to-date and accurate. It's unbelievable how often this is the cause of scoring issues.
Note any suspicious items that don't belong to you or duplicate accounts. Accidental duplicate accounts are a common problem for those with student loans or accounts in collections, but they also could be a sign of fraud. Investigate their cause and contact the Bureaus immediately.
Review the details of any negative items on your Credit Report, including Late Payments, Charge-Offs, Collections, and accounts listed as "Settled," "Paid Derogatory," or "Paid Charge-Off." Check them for errors.
For example, most negative items can only appear on Credit Reports for a limited time, typically 7 to 10 years. I call it the Credit Time Clock. If an item exceeds its time limit and doesn't fall off automatically, demand its removal.
Another way to Boost your Credit Score is to Get your Credit Utilization ratio below 30%.
Credit Utilization is the second most important factor in determining your Credit Score, and it's the easiest to address.
Credit Utilization refers to the amount of credit you're using compared to the total amount of credit available to you. The most common number associated with Credit Utilization is 30%.
For example, if you have a credit card with a $10,000 limit, you should only use up to $3,000 at any given time, even if you pay your account off in full each month.
If your balances exceed 30% of your credit limit, you can pay it down or request that your creditors raise your available credit limit. Do what makes the most sense for you.
Also, Pay Attention to the Length of your Credit History!
The Length of your Credit History is 15% of your Credit Score. Closing old accounts can shorten your history, hurting your score. So, keep old accounts open and use them occasionally to maintain your positive record.
If you hate credit cards as I do and don't want to use them anymore, cut them up or hide them away, but keep the account open! Don't let them do more damage by getting rid of them.
Last, if you want to Improve your Score, Apply for Credit Sparingly.
Every time you apply for new lines of credit, your report gets checked, which can harm your score. If lenders see too many applications on your report, they might see it as a sign that you're a high-risk borrower. On top of that, opening new lines of credit and accounts less than a year old can actually hurt your score!
New Credit accounts make up 10% of your Credit Score, so only apply for new lines of credit when necessary.
There's so much more to say and more ways to boost Credit Scores, but I'm already over the 5-minute mark, and you can check out the rest when you download my Free guidebook at 7 Simple Things to Increase Your Credit Score.
MY FINAL POINT
Credit Repair isn't rocket science. You can do it yourself or hire a professional, and most professionals started by doing it themselves.
But either way, all you really need to boost your Credit Score is to learn your rights and take action!
I'LL END BY SAYING...
If you still need a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Sign up here for a Free Trial!
And if you'd like to change lives and grow your very own Credit Repair business, check out our Credit Hero Challenge!
It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
So take care, Credit Hero!
Keep Changing Lives!