WEBVTT - How to Boost Your Credit Borrowing Power

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<v Speaker 1>This episode is brought to you by P and C Bank.

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<v Speaker 1>A lot of people think podcasts about work are boring,

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<v Speaker 2>The greater number of one time payments that you accumulate,

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<v Speaker 2>the more season your credit profile is considered. Right, and

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<v Speaker 2>we'll get more specific with that. These timely payments form.

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<v Speaker 2>What's the basis of your borrowing power? You guys? Throughout

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<v Speaker 2>this presentation, you guys are hearing me say barring power

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<v Speaker 2>a lot, right, and barring power just means your ability

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<v Speaker 2>to borrow and at what terms are you able to

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<v Speaker 2>borrow at? Right? Lenders utilize this term frequently and it

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<v Speaker 2>just means how risky do they assume you are based

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<v Speaker 2>on your credit profile. Right, what what what what history

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<v Speaker 2>or what what borrowing abilities or debt management skills does

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<v Speaker 2>your credit profile speak to based on the history of

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<v Speaker 2>your accounts?

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<v Speaker 1>Okay?

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<v Speaker 2>So, in other words, your barring power does not align

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<v Speaker 2>just with your credit score, does not necessarily align with

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<v Speaker 2>with your credit score. Right. There are so many individuals

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<v Speaker 2>who have a high credit score, good credit or or

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<v Speaker 2>or or vice versa, and they their barring power may

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<v Speaker 2>not match their credit score. Right because, contrary to popular belief,

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<v Speaker 2>your your credit score and your credit profile are two

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<v Speaker 2>totally separate things, right, And then another thing on top

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<v Speaker 2>of that, lenders are not as concerned with your credit

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<v Speaker 2>score as we are as consumers, Like we're more concerned

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<v Speaker 2>with our credit scores. Excuse me, guys, We're more concerned

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<v Speaker 2>with our credit scores than lenders are. Right. So, when

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<v Speaker 2>you are filling out a credit application, your credit score

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<v Speaker 2>is not the determining factor on if you will be

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<v Speaker 2>approved for said card or car or home. Right, it

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<v Speaker 2>has a little, it has a little to do with it. However,

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<v Speaker 2>it's never going to be the deciding factor. It's always

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<v Speaker 2>going to be your credit profile. Right, And that just

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<v Speaker 2>means what makes up the last seven years of how

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<v Speaker 2>you've behaved in your credit, right, what does that speak

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<v Speaker 2>to the history on all of your accounts and all

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<v Speaker 2>of that right now, the total number of late payments

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<v Speaker 2>on each of your accounts, as well as the ratio

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<v Speaker 2>of accounts with late payments to those without, both influence

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<v Speaker 2>how many points you're actually getting of those one hundred

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<v Speaker 2>and ninety two point five. And in other words, to

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<v Speaker 2>make it very simple, not only are you judged by

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<v Speaker 2>how many one time payments that you have versus mispayments,

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<v Speaker 2>but another factor that goes into determining how many of

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<v Speaker 2>those points that you're getting is how many accounts that

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<v Speaker 2>you have that has never had a lay payment. So

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<v Speaker 2>let's just say you have five accounts on your credit report,

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<v Speaker 2>and then three of them you've been late within the

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<v Speaker 2>last seven years, you would only have two accounts with

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<v Speaker 2>one hundred percent positive payment history for seven years, right. So,

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<v Speaker 2>in other words, if you want to obtain as much

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<v Speaker 2>of these points as possible, or hopefully every single one

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<v Speaker 2>of them, you would not only have to have no

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<v Speaker 2>lay payments for the last seven years, right, but you

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<v Speaker 2>can't even have like derogatory accounts collections or charge offs

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<v Speaker 2>in all of that right now, Just to relieve you

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<v Speaker 2>guys a little bit, you are not expected to have

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<v Speaker 2>a perfect credit score. In fact, only one percent of

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<v Speaker 2>the population has a perfect credit score of an eight

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<v Speaker 2>point fifty, So you don't actually have to strive for

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<v Speaker 2>a perfect credit score in order to have substantial barring power. Right,

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<v Speaker 2>And that's what I wanted to talk about today, Just

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<v Speaker 2>little things that you can do, that you can change

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<v Speaker 2>starting today that'll impact your barring power in a positive way. Okay. Now,

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<v Speaker 2>other factors that goes into determining how many points you're

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<v Speaker 2>getting is the time since your last mispayment, the degree

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<v Speaker 2>of lateness, So obviously you can be thirty days late,

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<v Speaker 2>sixty days late, ninety days late, up to one hundred

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<v Speaker 2>and twenty days late.

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<v Speaker 1>Right.

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<v Speaker 2>The type of account that you have a lay payment on,

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<v Speaker 2>there is a hierarchy to lay payments, right, a hierarchy

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<v Speaker 2>in the sense that, for example, mortgage accounts, lay payments

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<v Speaker 2>on mortgage accounts are considered the worst type of lay payments.

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<v Speaker 2>So if you have a mortgage and you have a

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<v Speaker 2>lay payment, that's one to wag weigh more heavily in

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<v Speaker 2>a negative way on your barring power. And your credit

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<v Speaker 2>score than if you were lay on let's say a

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<v Speaker 2>credit card. Right, So the hierarchy is mortgage accounts those

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<v Speaker 2>are the top dog, auto loans, revolving accounts which are

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<v Speaker 2>credit cards, and then retail accounts. So those are going

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<v Speaker 2>to be like your furniture accounts. If you have a

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<v Speaker 2>retail credit card or something like that, those are like

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<v Speaker 2>considered you know, low level accounts. Therefore their lay payments

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<v Speaker 2>of course still does affect you, but it does it

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<v Speaker 2>impacts you less than the other account types. Okay, again,

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<v Speaker 2>how many one time payments you add to your payment

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<v Speaker 2>bank will speak more to your barn cards. So the

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<v Speaker 2>more on time payments that you have, the better, the

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<v Speaker 2>better your credit profile is. Right, here's the tip. The

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<v Speaker 2>top one percent of borrowers one percent meaning like obviously

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<v Speaker 2>they get the top offers. The top one percent of

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<v Speaker 2>borrowers have successfully made more than five hundred on time

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<v Speaker 2>payments on their credit profile. Right. Remember that five hundred number,

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<v Speaker 2>because just the little tipig trick between me and you,

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<v Speaker 2>the that your credit profile records five hundred at least

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<v Speaker 2>five hundred payments within the last seven years, you immediately

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<v Speaker 2>you immediately your your credit profile gets taken up to

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<v Speaker 2>the top threshold. The contingency, I want to say, the

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<v Speaker 2>contingency is if you like, this does not work if

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<v Speaker 2>you've had a collection within the last twenty four months. Okay, now,

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<v Speaker 2>if you have had a collection within the last twenty

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<v Speaker 2>four months, your credit profile will still be ranked higher

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<v Speaker 2>than what it would have before you had five hundred payments.

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<v Speaker 2>But if you don't have a collection within the last

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<v Speaker 2>twenty four months, that is a sort of like cheat code, right,

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<v Speaker 2>it's a cheat code in order to take your credit

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<v Speaker 2>profile to what's probably a lower level based on whatever

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<v Speaker 2>your your credit profile looks like, immediately to the top

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<v Speaker 2>ranked amongst the top borrowers. Right. And there are tiers

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<v Speaker 2>when it comes to barring power. Right Like, two people

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<v Speaker 2>can apply for the same application, they can even have

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<v Speaker 2>the they can even have identical credit scores, but they're

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<v Speaker 2>not going to have the same barring power. Right Like,

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<v Speaker 2>one may get approved for one thousand dollars, one may

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<v Speaker 2>get approved of five hundred dollars. And how much you're

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<v Speaker 2>approved for is determined off certain things that you have

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<v Speaker 2>shown on your credit profile. And in this example, the

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<v Speaker 2>goal should always be at least five hundred payments within

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<v Speaker 2>the last seven years, right, And that sounds like a lot,

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<v Speaker 2>but it's not a lot because I've already done. I

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<v Speaker 2>did a calculation for you. All you have to do

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<v Speaker 2>is have six accounts which will will record seventy two

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<v Speaker 2>payments per year towards your payment history for seven years.

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<v Speaker 2>So if you maintain six, if you maintain at least

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<v Speaker 2>six accounts, and if you have student loans like this

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<v Speaker 2>is very easy to do. If you maintain if you

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<v Speaker 2>maintain at least six accounts for you know, over over

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<v Speaker 2>the course of seven years, then you'll get your five

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<v Speaker 2>hundred payments. Now. Obviously, if you have more accounts than that,

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<v Speaker 2>then you'll you'll reach it faster. Right, But that's one

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<v Speaker 2>of the for sure ways to ensure that you are getting,

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<v Speaker 2>depending on the rest of your profile, all it or

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<v Speaker 2>most if not all, of those one hund ninety two

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<v Speaker 2>point five points, right. So that's sort of a way

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<v Speaker 2>to make your credit profile resilient. Right, Like if you

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<v Speaker 2>do if you are getting most of those points or

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<v Speaker 2>all of those points, things are not going to impact

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<v Speaker 2>you as much as they would impact someone else that's

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<v Speaker 2>not getting all of the payment history points because it

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<v Speaker 2>is the largest factor of your credit score, and it

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<v Speaker 2>lends more than more than any other category. Right, So

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<v Speaker 2>remember that five hundred payments will automatically make your credit

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<v Speaker 2>profile considered experience automatically. It's not an opinion thing, it's statistically.

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<v Speaker 2>If you have five hundred one time payments obviously not

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<v Speaker 2>lay payments. So five hundred one time payments recorded, which

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<v Speaker 2>again in the last seven years, your credit profile will

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<v Speaker 2>automatically be considered experienced, okay. And make sure they're on

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<v Speaker 2>primary accounts. So if it's an authorized user account, they

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<v Speaker 2>don't they don't. They don't impact your barring power the same,

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<v Speaker 2>So make sure you are doing these with primary accounts, okay.

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<v Speaker 3>An illegal alien from Guatemala charged with raping a child

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