Speaker 1: Welcome to How the Money. I'm Joel and I'm Matt,
Speaker 1: and today we're talking about how to improve your credit score.
Speaker 1: All right, Matt, real quick. I wanted to give people
Speaker 1: a beer tip because we love to talk about beer
Speaker 1: on the podcast, right, and we normally wait till the
Speaker 1: end to talk about the beer, But you want to
Speaker 1: talk about it now, I do, well, I want to.
Speaker 1: I want to do a tip. So this struck me
Speaker 1: as really important and it's actually really influenced the way
Speaker 1: I enjoy beers and how good they are because I've
Speaker 1: done it a different way and they don't taste as good.
Speaker 1: So when you buy a six pack or whatever, when
Speaker 1: you buy a beer, sometimes you have the desire to
Speaker 1: chill it in the freezer real quick so you can
Speaker 1: drink it that night or something like that. I think
Speaker 1: it's really important for the beer to avoid bottle shock
Speaker 1: and bottle shock and just kind of mess with the
Speaker 1: taste of a beer is to have it in your
Speaker 1: fridge overnight, to let it chill naturally gradually instead of yeah, gradually,
Speaker 1: and then pull it out. Another important tips, So let
Speaker 1: your beer chill overnight gradually, and then when you pull
Speaker 1: it out, let your beer warm up for thirty minutes
Speaker 1: before you pop it open. Um. I think the warmer
Speaker 1: your beer gets, the more flavors are open. So if
Speaker 1: you're drinking like cores light, who cares, right, drink it cold?
Speaker 1: Drinking cold because you don't want those flavors to come
Speaker 1: out tap the rockies. Yeah, but if you're drinking a
Speaker 1: good beer, you wanted to warm up a little bit
Speaker 1: and those natural flavors are gonna come out more. And
Speaker 1: so I was just thinking about it because our beer
Speaker 1: today and we'll get into it in a minute is
Speaker 1: dog Fish Heads Oak aged Vanilla Worldwide Stout, and I
Speaker 1: was like, okay, I gotta pull this over question. We
Speaker 1: need to warm that up. It needs to warm up because,
Speaker 1: like I'm going to get those extra oak and vanilla
Speaker 1: notes if it's warmer. That's true, man, I hadn't thought
Speaker 1: about that. We do that all the time without really
Speaker 1: thinking about it, but just from having had numerous craft
Speaker 1: beers in the past decade. But yeah, we should do that, Hooks.
Speaker 1: That's that's a good tip. So there you drink your
Speaker 1: craft beer and drink it better make sure it tastes awesome.
Speaker 1: And also I just want to say thank you to
Speaker 1: all the people that have left ratings and reviews on
Speaker 1: Apple podcast Man, all the glowing reviews, Thank you guys.
Speaker 1: It's huge for us. Man, it's huge for us, and
Speaker 1: so um it makes me feel good about myself. We're
Speaker 1: on episode ten right now, and if you have been
Speaker 1: listening since the beginning or just really gotten in the
Speaker 1: last few episodes and you're into what we're talking about,
Speaker 1: it's helpful. I would ask you kindly to please leave
Speaker 1: us a rating and or review on Apple Podcasts or
Speaker 1: wherever you listen to your podcast. It's super helpful and
Speaker 1: just um helps other people that love craft, beer and
Speaker 1: money talk find our podcast. Yeah, Joe, so Atlanta United.
Speaker 1: We are both big fans uh and we were recording
Speaker 1: this a little bit ahead of time as we haven't
Speaker 1: had our first match against uh DC United. Oh Atlanta United.
Speaker 1: By the way, it's it's our soccer team, right, It's
Speaker 1: our Atlanta soccer team. I wanted to talk about jerseys,
Speaker 1: like the expensive jerseys. Yeah. The reason I asked I
Speaker 1: want to bring that up is because I grew up
Speaker 1: not not wearing jerseys. It's just wasn't part of my childhood.
Speaker 1: I wasn't huge into sports. You didn't even grow up
Speaker 1: wearing pants, So I grew up in the in the
Speaker 1: woods naked. You're one of the woodland people. Is that
Speaker 1: a boy that lives in his eyes? Every once in
Speaker 1: a while, they're like feral children. No, but dude, jerseys
Speaker 1: are so expensive. And I was curious because I was
Speaker 1: thinking about it. Back when we used to go to
Speaker 1: the Braids all the time when they're in town. You know,
Speaker 1: you always had Atlanta Braves jersey. Uh and you would
Speaker 1: always rag me if for not having any any of
Speaker 1: like team gear. But I wasn't gonna spend the money
Speaker 1: on I mean close to like a hundred bucks on
Speaker 1: a on a nice jersey, you know. And this past
Speaker 1: Christmas scored a sweet you know, official jersey, which I'm
Speaker 1: super stoked about. Uh So, how do you justify that?
Speaker 1: You know, you've got something you support and love your team,
Speaker 1: but then on the other hand, you've got crazy ments
Speaker 1: of jersey and they changed to you. That's what's so
Speaker 1: crazy is that every every couple of years. Uh. I
Speaker 1: mean some some leagues they're even required to update their jerseys. Yeah,
Speaker 1: give me your thoughts, all right. So here's how I
Speaker 1: approach stuff. Like buying a jersey. That is something I
Speaker 1: typically will not buy for myself because of the expense.
Speaker 1: And I usually ask for something like a jersey or
Speaker 1: a hat or something like that for a team that
Speaker 1: I love and follow, for Christmas or for my birthday.
Speaker 1: So that's usually like I did, yeah exactly, I like
Speaker 1: put it on the list and I know that I
Speaker 1: want something like that. So you know, it was my
Speaker 1: birthday in February and my folks got me one Atlanta
Speaker 1: United jersey. And then I had some birthday money and
Speaker 1: I decided found a sale and I bought another one.
Speaker 1: So those are the two that I'll need for hopefully
Speaker 1: the next three seasons because I don't mind wearing last
Speaker 1: year's or two years ago jersey, but um, it is
Speaker 1: nice to have that just to support my team, and
Speaker 1: then to have an alternate one in case I like
Speaker 1: completely sweated that one out or something. True, I feel
Speaker 1: like I can wear an old jersey as almost like
Speaker 1: a point of pride and be like, yeah, I'm not
Speaker 1: gonna buy that new one. And as well, we're not
Speaker 1: super super cheap. We we're not willing to spend money
Speaker 1: on something that we really love. All right, let's move
Speaker 1: on to the beer. We're over at my house tonight
Speaker 1: recording and a palatial alt Mixed studios. We've been over
Speaker 1: at your place that like past three three or four episodes,
Speaker 1: and I actually have really liked it because it's a
Speaker 1: nice pick me up to bike over to your place
Speaker 1: in the in the cool night air. But I've been
Speaker 1: biking a lot lately, so I'm actually glad to not
Speaker 1: be on the bike today. See. I like doing it
Speaker 1: at your house because when I get bored looking at
Speaker 1: your face I can look at your great Dane in
Speaker 1: the corner there and just yeah, she's she's a good dog.
Speaker 1: She's sweet. But yeah, you so you brought over a
Speaker 1: beer oak aged vanilla worldwide stout yep from dog fish
Speaker 1: Head Doctor's Head, and they're freaking awesome and big thanks
Speaker 1: to my friend Ryan. Yeah he he hooked you up.
Speaker 1: Yeah he. His wife is from Delaware, and so when
Speaker 1: he goes up there every once in a while, which
Speaker 1: that's where doctor Shed is, and he picks up some
Speaker 1: good beers, and super kind of him to uh to
Speaker 1: donate these uh, these beers to the podcast. And this
Speaker 1: one weighs in at a super stout seventeen and a
Speaker 1: half percent. Yeah, so if we start, I'm excited that
Speaker 1: we each have our own, our own twelve ounces of
Speaker 1: beer of this mom also a little worried by the
Speaker 1: time we get to the end of the podcast. I
Speaker 1: was gonna say, yeah, it fights ourselves a little bit
Speaker 1: if at the end of the podcast we're slurring our
Speaker 1: words as we deliver our final thought. That is I mean,
Speaker 1: that's bigger than a lot of wines. Right, I don't
Speaker 1: drink a ton of wine, but isn't wine like around
Speaker 1: fifteen Yeah, exactly, it's beastly. Are you gonna crack these open?
Speaker 1: Let's crack it? Mm hmmm, gonna be honest, as soon
Speaker 1: as you crack it, you get like a boozy waft
Speaker 1: through the air. It just smells like dark, dark beer.
Speaker 1: And if I were to start a rock and roll band,
Speaker 1: I call it boozy Waft. Hey man, you're going to
Speaker 1: the Boozy Waft show tonight. Yeah. Those guys are awesome.
Speaker 1: They do all justin Bieber covers. Right, I thought I
Speaker 1: was the only fan. You know them too? So this
Speaker 1: poores pitch black, nice caramel brown head. Oh man, it
Speaker 1: smells sweet too, which makes me very excited. Yeah, it's
Speaker 1: dark as night and I just had my first ship.
Speaker 1: It's lovely. It's lovely, It's wow. The oak and the
Speaker 1: vanilla come through super nicely, and the base stout is
Speaker 1: just kind of that perfect level. It's not overly viscous.
Speaker 1: And some of these like bigger stouts, they're like you
Speaker 1: almost have to choose them because they're so big and burly.
Speaker 1: That's a nice body for for such a big beer.
Speaker 1: I was expecting it to be a little superhier. Yeah,
Speaker 1: this one's this one slides down nice and uh, really
Speaker 1: really beautiful. Yeah. I mean, look at the carbonation for
Speaker 1: for such a big stout like this, I'm actually surprised
Speaker 1: at the amount of carbonation I've got coming up. Yeah.
Speaker 1: Sometimes these beers like this poor with almost zero had
Speaker 1: like no carbonation, and so you're just like literally feels like, um,
Speaker 1: it looks like old oil, it looks like motor oil,
Speaker 1: and it kind of has that feel in your mouth
Speaker 1: to this one does not. It's got a kind of
Speaker 1: a nice lively jump. Dude. I'm really glad you brought
Speaker 1: this over too, because it's been pretty cold lately. We've
Speaker 1: kind of had a cold streak here late in the spring,
Speaker 1: and you know, when it's cold outside, it's nice to
Speaker 1: have a big kind of warming beer like this because
Speaker 1: I can already feel it in my belly. Yeah, like
Speaker 1: a stout booze in my belly. I'm not really feeling
Speaker 1: stouts in July and August, but when it's you know,
Speaker 1: thirty five degrees outside, I'm all about it. Stouts and
Speaker 1: barley wines are two of my favorite winter style beers.
Speaker 1: Um And actually one of our listeners wrote in and
Speaker 1: he had some questions about barley wines. So if you
Speaker 1: have questions about beer styles or you just want to
Speaker 1: talk more about it, I feel free to join our
Speaker 1: Facebook group or email us. But our Facebook group is
Speaker 1: the perfect place to ask questions and kind of engage
Speaker 1: on topics related to beer and money. Um. But bar
Speaker 1: wines and stouts two of my favorites to drink during
Speaker 1: the cold months. So thanks to Ryan for donating these
Speaker 1: beers to the podcast. Dude, it's awesome. I really appreciate it. Uh.
Speaker 1: And on that note, Matt, let's get into how to
Speaker 1: improve your credit score. So the credit score, let's first
Speaker 1: talk about actually what that is, right, Yeah, So it's yeah,
Speaker 1: it's important to note the definitions and a credit score.
Speaker 1: It feels like the super secretive thing. And for years
Speaker 1: and years and years, it kind of was secretive. It
Speaker 1: was really hard to get your credit score. Back before
Speaker 1: the Internet, people didn't know what made up a credit score, right, Yeah,
Speaker 1: they didn't know what made it up, and they didn't
Speaker 1: really have access to it. And that's changed over the years.
Speaker 1: I mean I even remember ten years ago, I used
Speaker 1: to bank with a bank called Washington Mutual that is
Speaker 1: now difficult. Yeah, I remember them, and they one of
Speaker 1: their parks was we'll give you access to your credit score,
Speaker 1: and nobody else was doing that. And I was like
Speaker 1: super pump because I'm a nerd and I wanted to
Speaker 1: know about it, um and so that was really fun
Speaker 1: for me, Like, I want to see that stats. And uh,
Speaker 1: fortunately now we live in an age where you have
Speaker 1: access to it and will tell you kind of how
Speaker 1: that works later on and where to go to get
Speaker 1: that um. But essentially, a credit score is a tool
Speaker 1: that financial institutions use in order to decide whether they
Speaker 1: should lend you money or not, and typically is referred
Speaker 1: to as as the FICO score f I CEO. There's
Speaker 1: three main players that you've heard of, and all those
Speaker 1: kind of play into they're all weighted and create your
Speaker 1: FICO score. But experience TransUnion and Equifax, the ladder of
Speaker 1: which had a huge UH data breach last year and
Speaker 1: stunk it up bags Yeah, good jog bays. This episode
Speaker 1: is brought to you by Equifax. Yeah. And the other
Speaker 1: thing is too, is there are are a lot of
Speaker 1: different credit scores out there. There's different algorithms, Different companies
Speaker 1: have their own sort of proprietary scores. They're all roughly
Speaker 1: the same. They all typically have UH fall sort of
Speaker 1: within the range of like three hundred or three fifty
Speaker 1: to up to fifty and some go up to nine. Yeah,
Speaker 1: there's there's they're all sort of different, but they all
Speaker 1: operate around the sort of the same principles. And that's
Speaker 1: what we're gonna be talking about today. And so yeah,
Speaker 1: you might get UH one credit score from one place
Speaker 1: and one credit score from another place, and they're gonna
Speaker 1: be a little bit different, and you're like, well, what's
Speaker 1: going on? Uh? And it's just because these different credit
Speaker 1: bureaus have their, like Matt said, their own algorithms, and
Speaker 1: they are essentially waiting things slightly differently but there are
Speaker 1: a ton of principles that you can lean in in, uh,
Speaker 1: in order to help you understand how to how your
Speaker 1: credit score is made up and therefore how to make
Speaker 1: your credit score great. So, like we said, your credit
Speaker 1: score is how financial institutions are going to decide whether
Speaker 1: to lend you money. So good credit score means more
Speaker 1: favorable interest rates. It means yes, you're going to get
Speaker 1: that long and I mean that's why this is important
Speaker 1: is because this affects how much you're paying an interest
Speaker 1: based on the right that the bank or whatever financial
Speaker 1: institution you're working with is going to give you back.
Speaker 1: In old school human society, a credit score was essentially
Speaker 1: knowing somebody and knowing their trustworthiness. And now, because like
Speaker 1: there's three million people in this country, you have to
Speaker 1: have a score assigned to you because you walk into
Speaker 1: your local bank and they don't know, you know, Matt
Speaker 1: all makes pays his bills or not. Uh, And that's
Speaker 1: why there's this score assigned to you to kind of
Speaker 1: let them know, oh, well, Matt's paid all these other
Speaker 1: bills on time and uh, and he's he seems to
Speaker 1: have used it well his credit Well, so you know
Speaker 1: what he's trustworthy and we can lend to him, whereas
Speaker 1: you know before in early human days, it's like that
Speaker 1: guy sleeps in really late and he was really contribute
Speaker 1: to the meals at night. So he's saying, back then,
Speaker 1: I would not have gotten a good a good loan,
Speaker 1: but but maybe today I would exactly exactly what I'm
Speaker 1: trying to say, jerk. Why do you need a good
Speaker 1: credit score? Yeah, I mean so essentially, I mean, just
Speaker 1: like you're saying it, it establishes basically your financial reputation
Speaker 1: is maybe the best way to kind of describe it.
Speaker 1: And it's not to be overlooked. I used to be
Speaker 1: huge into Dave Ramsey, maybe about ten years ago, and
Speaker 1: he used to call the FICO score the I Love
Speaker 1: Debt score, because this whole thing is obvious. You know,
Speaker 1: everybody knows get out of debt, that's the inside debt,
Speaker 1: that's his whole stick. And I was all about that.
Speaker 1: I was like, Oh, that's cool. I mean, I had
Speaker 1: a FICO score because I we'd always used I use
Speaker 1: credit card since I was a teenager. But I didn't
Speaker 1: really care about my score until we started applying for
Speaker 1: loans to buy a house and then I realized, Oh,
Speaker 1: I'm glad I've got a pretty good credit score, because
Speaker 1: otherwise that would affect me negatively big time and the
Speaker 1: kind of loan that we could get, and especially as
Speaker 1: a self employee person, we don't have regular income, and
Speaker 1: so because of that, banks are super nervous when it
Speaker 1: comes to lending to someone like me. I've got a
Speaker 1: very variable income and they do not like that. It's
Speaker 1: very hard to get alone when you're self employed, and
Speaker 1: because of that, having a good credit score is huge. Yeah,
Speaker 1: it means even more for you than it does for
Speaker 1: the average person that can kind of rely a little
Speaker 1: more on their paycheck history and they can say, listen,
Speaker 1: this is how much I have coming in every month
Speaker 1: and point to that. And granted they still need a
Speaker 1: decent credit score as well, but for you, the credit
Speaker 1: score means even more. Yeah. When they're employed by g E,
Speaker 1: you know, the bank's like, okay, it'll be cool, Yeah, okay,
Speaker 1: you're you have written normal employment and steady employment for
Speaker 1: UH an employer that is going to be around for
Speaker 1: a while, and that that helps a lot. But like
Speaker 1: you alluded to as well, Matt, this credit score has
Speaker 1: actually spidered its way into almost every element of life.
Speaker 1: So essentially your credit score will affect your loan rate.
Speaker 1: So you apply for a mortgage, a car loan, anything
Speaker 1: like that credit card, you're that makes sense, Yeah, you're right,
Speaker 1: that makes sense. It's gonna affect that you. You know,
Speaker 1: if you have a credit score of seven eighty, you're
Speaker 1: going to essentially probably get the best mortgage rate possible,
Speaker 1: which might be let's say four percent, and someone with
Speaker 1: much lower credit score six twenty might essentially be paying
Speaker 1: four point seven five, like a huge gap, which it
Speaker 1: would have have a point or full point onto a
Speaker 1: prime which could cost you dollars over the life of
Speaker 1: loan over thirty years. So that's easily it's a huge factor, right,
Speaker 1: So you want to make sure that your credit scores
Speaker 1: buttoned up for things like that. Also renting a home,
Speaker 1: So if you haven't bought a home, if you're not
Speaker 1: interested in buying home, and you're a renter, your perspective,
Speaker 1: landlord is probably likely should be checking your credit. As
Speaker 1: we talked about in our Laura Investment Property episode Investment
Speaker 1: Property Basics, we touched on it then, uh and even
Speaker 1: now though, would you consider running though two two renters
Speaker 1: that have kind of low or like a bad with
Speaker 1: with bad credit. Yeah, I totally would if they check
Speaker 1: out in some of the other ways that I do
Speaker 1: tenant screening, And eventually we'll do a whole podcast on
Speaker 1: tenant screening, because that's what I want to do a
Speaker 1: big thing too. But yeah, essentially I would, but they'd
Speaker 1: have to meet some other parameters and probably provide a
Speaker 1: bigger security deposit so that you know, I'm ensured essentially
Speaker 1: in that way. And so yeah, just be ready for that.
Speaker 1: If you're running home if you have a low credit score,
Speaker 1: you might especially be paying a larger security deposit, and
Speaker 1: some landlords might turn you away altogether just because you
Speaker 1: have a bad credit score rating. Yeah. And and then
Speaker 1: I saw too how different companies and even employers are
Speaker 1: taking your credit score and account when it comes to
Speaker 1: like getting a job. Man, I didn't actually even realize
Speaker 1: this until recently. Um, but employers are literally checking your
Speaker 1: credit score when they're I mean when in the hiring process,
Speaker 1: which seems really weird. In some jobs, it makes sense,
Speaker 1: like if you are handling a lot of money or
Speaker 1: could be. I guess essentially the way it started off
Speaker 1: with certain employers said, you know, what this person needs
Speaker 1: to have good credit and good financial standing because they
Speaker 1: can be subject to blackmail and they're handling company funds,
Speaker 1: they might be forced into using company funds to cover
Speaker 1: up for some of their financial indiscretions. And so that
Speaker 1: was why it started, but it's really breached out into
Speaker 1: other areas of hiring and people are having to give
Speaker 1: their credit scores for jobs that really they shouldn't have
Speaker 1: to be giving their Yeah, letting their employer to know
Speaker 1: their credit score for yeah, to me, that just seems
Speaker 1: really weird. I totally get it. I guess in some
Speaker 1: financial institutions that you know, if you're like getting for
Speaker 1: a major stockbroker or something like, yeah, exactly exactly, But
Speaker 1: what does the credit score have anything to do with, say,
Speaker 1: like like a doctor, or like a hospital hiring a doctor,
Speaker 1: or a lot of positions where money just really isn't
Speaker 1: that important when it comes to how well they can
Speaker 1: do their job. Honestly, a big reason that you were
Speaker 1: maybe even able to get that job, they had to, say,
Speaker 1: finance their student loans and you know, things like that,
Speaker 1: and maybe they're a little bit behind and they're not
Speaker 1: doing the the different programs that are offered out there. Yeah,
Speaker 1: I think it should be out of bound. Kind of
Speaker 1: weird for for most employers, and and obviously for some
Speaker 1: employers in some positions that should be waived. But yeah,
Speaker 1: I agree with you. I think it's it's kind of
Speaker 1: messed up that it's that much a part of the
Speaker 1: hiring process more and more. And another way that we
Speaker 1: think is kind of messed up that your credit scores
Speaker 1: used is in setting your insurance rates, and so your
Speaker 1: insurance premium him are going to be based sometimes in
Speaker 1: large part, based on your credit score. We're talking like
Speaker 1: health insurance, life insurance, car insurance, car insurance, and home
Speaker 1: insurance most especially. Yeah, and so so some studies have
Speaker 1: shown that someone with a great credit score and a
Speaker 1: d u I on the record will get a better
Speaker 1: insurance rate than someone with really poor credit but no
Speaker 1: d u I, no bad driving record. And that's for
Speaker 1: car insurance, for car insurance. It seems so backwards, dude. Yeah, man,
Speaker 1: So that's how far the credit score has gone into
Speaker 1: our society. It means so much, and it goes everywhere.
Speaker 1: It affects you know, whether you can get a job,
Speaker 1: and your insurance premiums, and it's crazy, whether you can
Speaker 1: run a home, and how much you're gonna pay on
Speaker 1: your mortgage if you buy a home, and so it's
Speaker 1: so far reaching that that's the importance behind having a
Speaker 1: good credit score. Yeah, I mean like it, like it
Speaker 1: or not. Basically, it's becoming something that you need to
Speaker 1: pay attention to. Even if say you buy homes in
Speaker 1: cash and you're just kind of flush. It's something that
Speaker 1: you need to consider because it does affect a lot
Speaker 1: of aspects of your life. Yeah, if you are like
Speaker 1: Richard Branson, rich you probably don't need to worry about
Speaker 1: your credit score, but otherwise you need to know. And
Speaker 1: one last thing randomly, I read this story recently that
Speaker 1: having bad credit can actually hurt you when it comes
Speaker 1: to you dating. So, Matt, we don't have to worry
Speaker 1: about this because we're married. But if you're out there
Speaker 1: and you're still flipping through tender trying to find a
Speaker 1: significant other, or is there a field like on tender
Speaker 1: where you like, you like enter ear and enter in
Speaker 1: your age and then after that, like your credit score,
Speaker 1: don't I don't know. I'm happily married, so I haven't
Speaker 1: been on tender yet, but uh, you know, I don't
Speaker 1: think so. But it was interesting that most people said,
Speaker 1: because again, you know, we we we talked about how
Speaker 1: it's kind of this indicating factor, the credit score of
Speaker 1: your trustworthiness, and so people when they're dating someone else,
Speaker 1: they were asked the question, you know, would you date
Speaker 1: someone with an awful credit score? And most people were like,
Speaker 1: no way, and essentially saying that I don't really trust
Speaker 1: people that have a terribly low credit right, it's so crazy. Yeah,
Speaker 1: what it's thaying is that in the same way that
Speaker 1: businesses and insurance companies are sort of screening people, I mean,
Speaker 1: I guess, uh, folks that are out in the dating
Speaker 1: pool were doing the same thing. And that's interesting. I mean,
Speaker 1: looking back, it's weird to that long long time ago.
Speaker 1: You know, when we were dating people. If someone would
Speaker 1: come up to me and you know, introduce themselves and
Speaker 1: they seem really nice or whatever, but they were like,
Speaker 1: my credit score is probably would have been like, okay,
Speaker 1: you know what I mean, you're a total nerd so too. Yeah,
Speaker 1: but I didn't assume most of what that was back then,
Speaker 1: Whereas I feel like I had an idea of what
Speaker 1: makes up your credit score and like what it means
Speaker 1: but in general, I feel like a lot more has
Speaker 1: kind of come out recently about your credit score and
Speaker 1: what and what it means for you than it did
Speaker 1: back then. Yeah, for sure. Like like we said at
Speaker 1: the beginning, I mean think in the last ten years,
Speaker 1: a lot of change when it comes to credit scores.
Speaker 1: There's a lot more transparency, and we're we have easy
Speaker 1: access toward scores. The world has changed a lot in
Speaker 1: the last ten years. Drill Apparently I was cryogenically frozen,
Speaker 1: so I missed some of it. You and Harrison Ford exactly.
Speaker 1: So yeah, if you are in the dating world, pick
Speaker 1: up your credit score so you can pick up more
Speaker 1: of the opposite gender. So next we're gonna talk about
Speaker 1: basically how to improve your credit score, how to get
Speaker 1: a higher credit score, what you can steps you can
Speaker 1: take that can improve that. And by doing that, we're
Speaker 1: gonna be explaining the makeup of what what you know,
Speaker 1: what goes into a credit score. So we're gonna talk
Speaker 1: about the things that the different companies take into account
Speaker 1: when they're creating your credit score, and we're also gonna
Speaker 1: talk about how to improve those things. And the number
Speaker 1: one thing, and it's weighted averages essentially that they that
Speaker 1: they factor in. So the number one thing that credit
Speaker 1: scoring companies are looking at is your payment history. Yeah,
Speaker 1: of course, duh right. So what that means is that
Speaker 1: if you have payments on a credit card or a
Speaker 1: car loan or student loans even as well, Uh, you
Speaker 1: need to be paying on time or early. That's how
Speaker 1: you're going to keep these different companies happy. Uh, And
Speaker 1: that's how you're going to make sure your payment history
Speaker 1: is is in the clear. And this becomes especially bad.
Speaker 1: If you're you know, a few days late, it's not
Speaker 1: the big of a deal, or even thirty days later
Speaker 1: it might be a small ding. But if you get
Speaker 1: to ninety days late and get essentially delinquent on a
Speaker 1: credit card payment or on a bill payment, uh, that
Speaker 1: can it's really bad. That can really hurt your credit
Speaker 1: in a big way. And if you have a few
Speaker 1: of those on there, that can stay on your credit
Speaker 1: score for seven years and can we really put a
Speaker 1: hurting on you. You start getting out to ninety days
Speaker 1: out to eight days, six months, and different companies will
Speaker 1: start it's just I mean, they call it a charge
Speaker 1: off and basically they consider your debt or your you know,
Speaker 1: your payment uncollectable because they're like, well they haven't paid,
Speaker 1: they're probably not going to pay, and that really really
Speaker 1: negatively affects your your credit score. And like we said earlier,
Speaker 1: your payment history, paying on time or paying early makes
Speaker 1: up of your credit score. So that is hugely important
Speaker 1: and matt Essentially, the time frame that you need to
Speaker 1: know that could have impact your credit score is the
Speaker 1: thirty day mark, in the ninety day mark. And while
Speaker 1: some institutions that you have credit through won't report anything
Speaker 1: until it h's sixty days late, be cognizant that most
Speaker 1: will at thirty days ding a mark on your credit score.
Speaker 1: It could drop your score by a hundred and ten
Speaker 1: points that one mark, And so if you're thirty days late,
Speaker 1: that could be a big problem. Let's say you're shopping
Speaker 1: for a house or a car and you're just about
Speaker 1: to get alone and your your credit score drops a
Speaker 1: hundred and ten points. That could severely impact first whether
Speaker 1: you can even get the loan, and second the rate
Speaker 1: you're gonna pay. Yeah, you may not even qualify for
Speaker 1: that at all. Yeah, So your payment history is huge.
Speaker 1: It's the number one factor. Uh, thirty days late is
Speaker 1: really important to avoid and ninety days later is the
Speaker 1: most important to avoid. And like we said, that can
Speaker 1: stay on your credit report for up to seven years,
Speaker 1: so it can hurt you for a long long time. Further,
Speaker 1: it gets away from being marked up on your credit
Speaker 1: report like a few a few years later. Yeah, the
Speaker 1: better you are, it'll lesson the sting, will lessen fade. Yeah,
Speaker 1: but it will be there and people will see it
Speaker 1: and it will continue to hurt the actual score. And
Speaker 1: so you want to make sure you're paying your bills
Speaker 1: and your debts on time. So the next piece of
Speaker 1: the pie, the next biggest factor that goes into your
Speaker 1: credit score is the amount you oh or like most
Speaker 1: oftentimes too is referred to as your utilization, right, So
Speaker 1: this is where your limits come into play. Let's say
Speaker 1: you have a credit card with a five thousand dollar
Speaker 1: limit and you are using four thousand dollars of that
Speaker 1: limit every month. You're charging four thousand. Even if you
Speaker 1: pay it off every every month in full, you're still
Speaker 1: getting bingked because you're using a high level of your
Speaker 1: available credit. So if you have a five thousand dollar
Speaker 1: limit on your card and you are using five hundred
Speaker 1: dollars every month and paying it off in full. Yeah,
Speaker 1: that's more like it. That is going to be the
Speaker 1: sweet spot in significantly help your credit score because you're
Speaker 1: only utilizing a small amount of your available credit. And
Speaker 1: this credit utilization factor is a full thirty of what
Speaker 1: influences your credit score. So combine the credit utilization with
Speaker 1: your payment history, that makes up almost two thirds of
Speaker 1: your score. So these are the biggest two factors that
Speaker 1: play into having a high credit score. You know, you
Speaker 1: touched on some of the percentages there, but some other
Speaker 1: percentages too. Is that like you said five for five thousand.
Speaker 1: You said that because that gets us to that is
Speaker 1: the magical number. Yeah, that's that's kind of a key,
Speaker 1: a key percentage right there. A lot of folks will say,
Speaker 1: and that's definitely great, that's that's safe. Being below thirty
Speaker 1: is like getting a be on a paper. Yeah, being
Speaker 1: at ten per center below is like getting a plus. Yeah.
Speaker 1: Different experts are now saying that essentially the lower you
Speaker 1: can get it, the better because creditors they want to
Speaker 1: see that like, yes, you qualify for that loan or
Speaker 1: that credit card, but you're not really using it because
Speaker 1: you don't really need it. Your fancy and essentially that
Speaker 1: it seems that the lower you can you can get it,
Speaker 1: the better. There are no like sort of hard fast
Speaker 1: rules because again all these different companies have different formulas
Speaker 1: and sort of different algorithms that go into creating your
Speaker 1: credit score. But that is pretty clear that the lower
Speaker 1: you can keep your credit utilization rate the better. Yeah,
Speaker 1: and they're kind of secretive sometimes about exactly what comprises,
Speaker 1: uh some of the specifics on these right, so that
Speaker 1: FICO is not coming out and saying and experience not
Speaker 1: coming out and saying this is exactly the percentage you
Speaker 1: should stay under to have the maximum score. So some
Speaker 1: of these things are people know from kind of experience
Speaker 1: and looking at their own scores and studies that have
Speaker 1: been done about credit scores and some of the things
Speaker 1: that the actual credit bureaus have put out themselves as well.
Speaker 1: We have a really good understanding, but we don't have
Speaker 1: a perfect understanding that we can say these are the
Speaker 1: hard and fast rules. But from what we've experienced and
Speaker 1: seen and read, under ten percent credit utilization is going
Speaker 1: to be the sweet spot for you. So it's hit
Speaker 1: then as a way to be able to keep your
Speaker 1: your utilization rate lower is check in with your credit
Speaker 1: card and see if you can up your limit, if
Speaker 1: you kind of find yourself consistently, you know, pushing that
Speaker 1: tin and even even more so that see if you
Speaker 1: can increase your limit, and essentially you're utilizing less of
Speaker 1: the credit that you're allowed to use. And I will
Speaker 1: say that works and a lot of time if you're
Speaker 1: handling your credit well. But sometimes if you reach out
Speaker 1: to your credit card company and ask her a higher
Speaker 1: limit while showing that you haven't handled credit very well
Speaker 1: in the past, they might get a little worried. Yeah,
Speaker 1: we won't want to look as good. Yeah, it will
Speaker 1: affect your credit temporarily. It's weird because you need to
Speaker 1: be able to do those things in order to increase
Speaker 1: your limit, but at the same time, every time you
Speaker 1: do that, it affects your credit score negatively. I like
Speaker 1: to think of it almost as like you're opening the
Speaker 1: fridge or like the freezer. It's like you got to
Speaker 1: open it and see what's in there. It's sort of
Speaker 1: like when you're kind of checking your credit score, and
Speaker 1: it's going to kind of the lower the temperature a
Speaker 1: little bit every time you do that. But like that's
Speaker 1: what's necessary to get what you need out of the
Speaker 1: fridge um and then that's a good way to it,
Speaker 1: and then long term you'll be able to kind of
Speaker 1: build from there. Yeah. So if you're handling your credit
Speaker 1: pretty well, it's more than reasonable to reach out to
Speaker 1: one of your credit card companies and say, hey, it's
Speaker 1: just wondering if I could get a five thousand dollar
Speaker 1: limit increase, and if they grant that to you, that
Speaker 1: will definitely help your utilization rate. Just make sure that
Speaker 1: once you get that increase in limit, that doesn't increase
Speaker 1: your spending. Yeah. Just so those are the first two
Speaker 1: factors that go into the makeup of your credit score.
Speaker 1: What's the next one? The age of credit and the
Speaker 1: length of your credit history. So this makes that fift
Speaker 1: of your credit score, and essentially your creditors and the
Speaker 1: financial institutions they want to see that you've had a
Speaker 1: long history of paying your bills. So you eight year
Speaker 1: olds out there, you better be crushing it on this. Okay,
Speaker 1: there swollen on their history, Yeah they are, and on
Speaker 1: the shuffle board. Yeah, I mean this one is it's
Speaker 1: pretty simple. Essentially, the longer you've had accounts open where
Speaker 1: you've paid on time and kind of kept up with it,
Speaker 1: the better is gonna look. Um, when's when's the first
Speaker 1: time you got a credit card? Remember when you when
Speaker 1: your first credit card was? Gosh, I want to say
Speaker 1: it was almost towards the end of college, okay, which
Speaker 1: was probably good for me. I didn't know a whole
Speaker 1: lot about money. I knew I was cheap, but I
Speaker 1: didn't really know how to handle money at that point.
Speaker 1: And so if I had gotten a credit card, I
Speaker 1: don't think I would have bought crazy stuff, but I
Speaker 1: wouldn't have known how to utilize credit well at the
Speaker 1: age of like eighteen or nineteen. Yeah, it was twenty
Speaker 1: because when I look at you, and we'll talk about
Speaker 1: later how you can kind of look at some of
Speaker 1: the details about your credit and some great resources to use.
Speaker 1: But when I look at one of those resources, credit Carma,
Speaker 1: it essentially tells me how long my credit history is,
Speaker 1: and it's fourteen years. So I was twenty years old
Speaker 1: when I got my first credit card. Nice man. Yeah,
Speaker 1: I remember getting mine, and I think I had just
Speaker 1: got my driver's license. But there's there's rules now as
Speaker 1: far as what credit cards and what different companies are
Speaker 1: able to offer teenagers. Do you know what those laws
Speaker 1: are because I don't Yeah, you're not able to offer
Speaker 1: people under the age of eighteen, Okay, that's credit cards anymore.
Speaker 1: And so the sweet spot for you to get a
Speaker 1: get a credit card, to sign up and you know,
Speaker 1: if we have people listening who are aged eighteen to
Speaker 1: twenty two and are in college, that's the time to
Speaker 1: get credit and use it wisely. You start using it
Speaker 1: wisely because once you get out of college, if you
Speaker 1: don't have any credit history, it's tough. It's tough to
Speaker 1: get a credit card, and it's tough to get started.
Speaker 1: They're really willing to offer you credit if you're in
Speaker 1: college as a student, or if you're you're just doing
Speaker 1: that general age range, it's easier, but once you get
Speaker 1: out of that, it's it becomes a lot harder to
Speaker 1: get credit and established credit. So you're gonna want to
Speaker 1: make sure you start it. Then. Yeah, they say, oh,
Speaker 1: you're twenty three or twenty four, I see you have
Speaker 1: a job. How come you've never had a credit card.
Speaker 1: And it's sort of like this sort of catch twenty
Speaker 1: two thing where you need to have credit to get credit,
Speaker 1: but you should have a job before you start racking
Speaker 1: up credit. Card debt. So if you're in college and
Speaker 1: you get a credit card, really like buy your gas
Speaker 1: with the credit card or something and pay that off
Speaker 1: every month. But don't don't start willy nilly using it
Speaker 1: all over the place. Be smart. And one other really
Speaker 1: important thing to mention about the age of credit length
Speaker 1: of credit history factor is people ask the question all
Speaker 1: the time like should I close this credit card, And
Speaker 1: the answer is almost always no, because this is an
Speaker 1: important part of your credit score, and if you close
Speaker 1: that card, it is essentially you are hurting. First, your
Speaker 1: credit utilization basically brings down the total amount of credit
Speaker 1: that you have been offered, right, So just increasing your
Speaker 1: basically increasing your credit utilization rate. Yeah, and it also
Speaker 1: then if you've had that credit card for a number
Speaker 1: of years, it takes away from that that's been building
Speaker 1: to this, adding to your length of history. So just
Speaker 1: put it in a drawer somewhere or use it once
Speaker 1: a year to kind of keep it mildly active. But
Speaker 1: don't get rid of it altogether because if you do that,
Speaker 1: you're gonna actually hurt your credit score. Unless you have
Speaker 1: a credit card that has an annual fee. So if
Speaker 1: you've got a like an annual fee on a card
Speaker 1: that's just sitting around and you're not used it. Please
Speaker 1: don't keep that around. Yeah, it'll it'll definitely doing your
Speaker 1: credit to close it. But don't be so afraid to
Speaker 1: close an account, uh that you're going to keep this
Speaker 1: card sitting around that you're not using, that you're paying
Speaker 1: every year on because they've got a stupid annual fee. Uh,
Speaker 1: just because you don't want to hurt your credit. Yeah,
Speaker 1: let's ding it a little bit, but it'll recover, it'll
Speaker 1: be fine. Yeah. And let's say you're not shopping for
Speaker 1: a car a mortgage in the next six months. Yes, uh,
Speaker 1: then you can close a card like with an annual fee.
Speaker 1: That's when you can do it. If you're in the
Speaker 1: middle of shopping for something. Don't make any changes to
Speaker 1: your credit, no big changes, no big changes. But if
Speaker 1: you don't have anything that you're shopping for, go ahead,
Speaker 1: close that card with the annual fee. Save the ninety
Speaker 1: five dollars a year. You might, you know, drop twenty
Speaker 1: pots in your credit score, but that will recover over
Speaker 1: the next quick six months and be back close to normal.
Speaker 1: So then the next one, man is the type of
Speaker 1: credit that you have or like they basically your your
Speaker 1: credit mix um. And so what we mean by that
Speaker 1: is that creditors want to see that you have a
Speaker 1: nice sort of portfolio essentially of credit that you've been offered.
Speaker 1: Creditors want to see that you've got like you know,
Speaker 1: like a mortgage, a car loan, credit card, student loans,
Speaker 1: like all these different kinds of credit that you cant
Speaker 1: imply for. It's just, I know, explaining this and thinking
Speaker 1: through it, it is super weird. They're saying, you have
Speaker 1: all this credit available to you, but don't use very
Speaker 1: much of it. Have a whole equity line and a
Speaker 1: mortgage in a credit card and blah blah blah blah blah,
Speaker 1: but use like an incredibly infinitessimal amount of that credit
Speaker 1: that is available to you. It's super weird. But this
Speaker 1: is the way the credit scoring system works, how it's
Speaker 1: made up. And you've got to play the game because
Speaker 1: you really is like a game, isn't it. It's like
Speaker 1: a game. It's like a game, and you want the
Speaker 1: lowest rates, and so you've got to play this game, uh,
Speaker 1: to get it right so that you're saving the most money. Yeah,
Speaker 1: And that being said, this only makes up of your score.
Speaker 1: So don't get a car loan just because you're thinking like, oh,
Speaker 1: I want to get my credit score up, I want
Speaker 1: to get my credit scoring by the car and get
Speaker 1: a loan. Yeah, please do not do that. This is
Speaker 1: only ten percent. So we're kind of getting down to
Speaker 1: the bottom of the list now where these things aren't
Speaker 1: you know, having nearly as much of an effect on
Speaker 1: your credit score. It still has an impact, but you know,
Speaker 1: nothing close to like your payment history or your utilization rate.
Speaker 1: But if you do find find yourself having you know,
Speaker 1: very few lines of credit, you know what, consider opening
Speaker 1: up another credit card or two that don't have an
Speaker 1: annual fee so that you know you're not gonna be
Speaker 1: angry every year when you get that bill in the mail. Uh,
Speaker 1: and take out those credit lines and just you know,
Speaker 1: barely use them and pay them off. And so having
Speaker 1: those extra lines of credit can help this ten percent factor,
Speaker 1: and then over time can actually go to helping your
Speaker 1: length of credit history as well. So it can kind
Speaker 1: of have this like double whammy effect or triple wammy
Speaker 1: essentially because it's helping your credit utilization at the same time.
Speaker 1: All right, Matt, in the last factor, we're getting to
Speaker 1: the bottom here is hard inquiries for new credit account
Speaker 1: for ten percent of that piece of the pie when
Speaker 1: it comes to your credit score. Yeah, basically, what would
Speaker 1: mean by that is shopping for new credit. So whether
Speaker 1: that means trying to get an Alan, uh, new car
Speaker 1: loans so maybe a home equity loan. Maybe that means
Speaker 1: kind of applying for a new credit card. These are
Speaker 1: all hard inquiries on your credit. And what we mean
Speaker 1: by that is an example of a soft inquiry is
Speaker 1: you checking your credit score. Um, that's something that will
Speaker 1: not affect your credit score long term and uh, and
Speaker 1: you can do that, that's fine. However, applying for new
Speaker 1: credit hard inquiry, and that will drop your credit temporarily.
Speaker 1: It's not like a huge thing. Again, we're towards the
Speaker 1: bottom of the list here and this is only but
Speaker 1: keep that in mind. You don't want to just kind
Speaker 1: of constantly shot for new credit cards. That being said,
Speaker 1: in the past, I was looking before preparing for this podcast,
Speaker 1: and I've got seven hard inquiries on what you're shopping for. Man,
Speaker 1: So if you guys don't already know this, I'm a
Speaker 1: super nerd and what that means is that I'm constantly
Speaker 1: working the credit cards, the sign up bonuses, and there's
Speaker 1: some sick bonuses out and you just took advantage of
Speaker 1: a really great one. We're gonna do it an entire episode.
Speaker 1: I think on on work in the credit card system,
Speaker 1: I think, but I'm a big fan of doing that. Essentially,
Speaker 1: every three months, I try to get into credit card
Speaker 1: with like anywhere between a three to eight hundred dollar
Speaker 1: sign up bonus, as long as you spend a certain
Speaker 1: amount within you know, typically three months. So that's why
Speaker 1: that's why I've got a solid seven hard inquiries, which
Speaker 1: is it kind of surprised me when I saw it,
Speaker 1: but every one of those I was like, oh, yeah,
Speaker 1: that's me when yeah, the last one you signed up
Speaker 1: for was an eight hundred dollar bonus. Yeah yeah, that
Speaker 1: was a That was the business card which I was
Speaker 1: able to open through my photography company. But I mean
Speaker 1: I used it for for photography expenses and and I
Speaker 1: got I got that hundred dollars. Yes, Essentially, watch out
Speaker 1: when you're applying for credit. Just make sure you're not
Speaker 1: applying for credit all over the place. But one caveat
Speaker 1: is that if you're applying for a mortgage or car loan,
Speaker 1: usually if you're applying within a two week period for
Speaker 1: mortgages and you're you know, essentially shopping with a few
Speaker 1: different lenders, and same thing if you're buying a car,
Speaker 1: you're shopping with a few different lenders, your credit union,
Speaker 1: a bank, trying to get alone. If it's within that
Speaker 1: two week period, they will count it as one hard inquiry.
Speaker 1: So don't be worried about that. Make sure you're shopping
Speaker 1: around for your mortgage or car loans. That's way, that's great. Yeah,
Speaker 1: that's way more important than you know, feeling like you're, oh,
Speaker 1: I'm gonna doing my credit Like who cares? Your credit
Speaker 1: will recover. It's like constantly as long as you're as
Speaker 1: long as you're paying, you know, paying it off, like
Speaker 1: doing the big things, it will recover. And what's more important,
Speaker 1: way more important, I think is is shopping around and
Speaker 1: making sure you're getting a competitive rate, finding a lender
Speaker 1: that's not gonna really hit you with a ton of
Speaker 1: ridiculous closing costs. Yeah, so shop hard, shop around, but
Speaker 1: but do it inside of two weeks so that you
Speaker 1: can limit that exposure to your credit score. So those
Speaker 1: are the essentially those are the five biggest things that
Speaker 1: weigh into your credit score. Right, So I'll run down
Speaker 1: real quick payment history, your credit utilization, your age of credit,
Speaker 1: length of credit history, types of credit in your credit mix,
Speaker 1: and hard inquiries for new credit, and we will essentially
Speaker 1: put that pie chart in the show notes on our website. Yeah,
Speaker 1: those are all good things to keep in mind. Yeah,
Speaker 1: so you can check it out. It's really really helpful
Speaker 1: just to kind of visualize it and think through it
Speaker 1: when you're considering your credit score and how to make
Speaker 1: it better. So we're talking about what makes up, you know,
Speaker 1: your credit score, let's actually talk about how you can
Speaker 1: find your your credit score. Sure. So, Yeah, there's a
Speaker 1: couple of websites that I prefer to use and that
Speaker 1: I think are really the best out there for keeping
Speaker 1: track of your credit score, for tools that can kind
Speaker 1: of help you kind of stay on top of it. Um,
Speaker 1: my favorite is discovers tool Discover Who is a credit
Speaker 1: card Company's my favorite? Yeah, it's how you're gonna say
Speaker 1: one of the other one. It's awesome, Man, I just
Speaker 1: love that one because it's really simple. It's called credit
Speaker 1: scorecard dot com. You know a lot of the other
Speaker 1: credit cards are doing it. Nouncing like a max and
Speaker 1: uh capital one. Yeah, so essentially do now almost Yeah,
Speaker 1: like I said ten years ago Washington Mutual, it was
Speaker 1: like this like lone Ranger giving people their credit scores,
Speaker 1: and now you can get your credit score from almost
Speaker 1: any credit card that you have. Um, I just like,
Speaker 1: you know, I'm really weird about how things look, and
Speaker 1: the simplicity of things and and discovers website makes it
Speaker 1: really easy to find out exactly what I want to know.
Speaker 1: Like the line graph where it kind of like tracks
Speaker 1: it across. I like that, and I just I just
Speaker 1: like the simplicity of not being like marauded by pop
Speaker 1: ups and stuff like that, and so just nice and clean.
Speaker 1: You know what, I put in my information and I
Speaker 1: see my credit score and I move on. There's a
Speaker 1: lot of websites out there too that that will say
Speaker 1: that they'll give you your credit score for free too,
Speaker 1: that are legitimately free. Our credit Sesame and credit Carma. Yeah,
Speaker 1: those are grave views of those. I actually personally I
Speaker 1: have not used that as they're both fantastic sites and
Speaker 1: they're free, and essentially they work kind of like Mint does.
Speaker 1: If you use Mint as a budgeting or tracking tool.
Speaker 1: For your money. Uh, and there, you know, occasionally trying
Speaker 1: to sell you a credit card or trying to um
Speaker 1: get you to refinance your loan into something with you know,
Speaker 1: one of their advertisers. But they will give you access
Speaker 1: to your credit score from two of the bureaus, and
Speaker 1: they give you a really good idea of the categories
Speaker 1: in what you're doing well and when it comes to
Speaker 1: credit and the categories what you're doing poorly. So they'll
Speaker 1: they might tell you, for instance, hey, you know what
Speaker 1: credit card utilization, you're kind of a yellow on this
Speaker 1: like green yellow, red scale, and when it comes to
Speaker 1: hard inquiries, you're red right now. So they kind of
Speaker 1: help you understand. They break it down to to how
Speaker 1: it's weighted, which is really nice. Yeah. So these weights
Speaker 1: that we just told you about, you know, they're actually
Speaker 1: kind of telling you here's exactly where you fall under
Speaker 1: those weights and kind of how you can attack fixing them. Yeah.
Speaker 1: So in the show notes, we'll we'll put some links
Speaker 1: on there as well. It's some of the websites, there's
Speaker 1: a lot of and I say that earlier to a
Speaker 1: lot of the websites, they'll give you like a free
Speaker 1: trial and if you don't cancel it, you'll start getting charged.
Speaker 1: And so we'll put the links on there for some
Speaker 1: of the actual free websites where you can get your
Speaker 1: credit score and keep up with it. Yeah. So now
Speaker 1: let's get to a question that a listener posted, uh
Speaker 1: in our Facebook group. He wrote it all out and
Speaker 1: I'm just gonna paraphrase it. Essentially that what he's saying
Speaker 1: is that they had some long term, kind of long
Speaker 1: standing credit card debt and he opened up two or
Speaker 1: actually three new credit cards that had a zero percent
Speaker 1: interest for like one or two years, and so they're
Speaker 1: paying off their old credit card with those, and he
Speaker 1: was wondering why his essentially their credit got dropped pretty significantly,
Speaker 1: uh when when they did that. And this is where
Speaker 1: he's confused. It is because he was thinking, well, we
Speaker 1: increased the amount of credit that you know is offered
Speaker 1: to us, so therefore our utilization rate hasn't changed. But
Speaker 1: what he also said was that those new cards, he
Speaker 1: maxed them out, and I think that's where the problem was. Yeah, so, uh,
Speaker 1: something we didn't necessarily tackle earlier on when we talked
Speaker 1: about credit utilization. There's always been this debate about whether
Speaker 1: it is overall utilization. So let's say you have five
Speaker 1: credit cards. Is it of your overall credit cards or
Speaker 1: is it ten percent of each credit card. So let's
Speaker 1: say you've got five thousand dollars on a five thousand
Speaker 1: dollar card and nothing on the rest. Well, that five
Speaker 1: thousand dollars that you have out against that five thousand
Speaker 1: dollar card is actually gonna digging your credit in a
Speaker 1: pretty big way. It's going to negatively affect your utilization.
Speaker 1: It would be so much better if you had one
Speaker 1: thousand dollars out against all five credit cards, so five
Speaker 1: thousand dollars spread out evenly against all the cards. Yeah, yeah,
Speaker 1: And again, this is something that's kind of it's it's
Speaker 1: it's just kind of fuzzy, right, Like it's something that's
Speaker 1: kind of constantly changing. I don't think this used to
Speaker 1: be the case, but a lot of the experts now
Speaker 1: are saying that it's not sort of this aggregate amount
Speaker 1: of credit that you're offered and you need to stay
Speaker 1: overall underneath and even you know, ten percent is even better.
Speaker 1: It seems now that what experts are saying is that
Speaker 1: we're looking at per card and so trying not to
Speaker 1: exceed ten percent but definitely, you know, no more than
Speaker 1: thirty per card. So if your maxim ount a card,
Speaker 1: even though your total credit utilization hasn't changed, that's gonna
Speaker 1: hurt your score. Yeah, and I will say I actually
Speaker 1: kind of experienced this recently. I, um had to buy
Speaker 1: some things for work and get them reimbursed and so
Speaker 1: on this card that I have a limit on. I
Speaker 1: normally charge you know, probably like two thousand dollars a
Speaker 1: month and a yes, so right at ten percent and
Speaker 1: then uh, but I actually had to up it to
Speaker 1: like almost I think probably just over six grand in
Speaker 1: a recent month, and my credit score dropped probably like
Speaker 1: ten to thirteen points something like that. And so I
Speaker 1: kind of saw that firsthand. It wasn't even like massive, right,
Speaker 1: I wasn't using you know, nineteen thousand dollars out of
Speaker 1: the twenty, but even just bumping it up, the credit
Speaker 1: score just adjusted a little bit just based on that,
Speaker 1: and I was kind of surprised. Um. So, yeah, those
Speaker 1: individual credit cards and your credit utilization on each card matters,
Speaker 1: and you need to pay attention to that. Yeah, and
Speaker 1: we also touched on this earlier too, But every time
Speaker 1: you have a new inquiry for new credit basically, so
Speaker 1: when you every time you apply for a new credit card,
Speaker 1: that's a hard inquiry, and that again makes up ten
Speaker 1: percent of your total credit score. So every time you
Speaker 1: opened up one of those, your credit your credit score dropped.
Speaker 1: And that's something and with those being hard inquiries, that's
Speaker 1: something that's gonna take, I mean a while for that
Speaker 1: to rebound. I mean probably talking six months to a
Speaker 1: year of you know, paying again early or on time
Speaker 1: before you're gonna kind of see that creep back up
Speaker 1: to where you were before. Yeah. Unfortunately, the hard inquiries
Speaker 1: are only ten percent in your credit mix, and they
Speaker 1: only have the most lasting impact for the first six
Speaker 1: months to a year, and so um, that won't last forever.
Speaker 1: And if you can essentially kind of start to spread
Speaker 1: that money out on your of your credit card debt
Speaker 1: between other cards as opposed to maxing out two of them, um,
Speaker 1: that will really dramatically impact the health of your credit score.
Speaker 1: So consider those two things and read. Thanks for the question,
Speaker 1: all right, Matt. Back to the beer dog fish Head
Speaker 1: oak aged Vanilla worldwide stout. I am loving this man.
Speaker 1: This is completely in my wheel house, loving it. Clearly,
Speaker 1: Jill's feeling that seventeen and a half percent. So the
Speaker 1: reason I like it is that it's a big beer.
Speaker 1: It's seventeen and a half percent, But it doesn't drink
Speaker 1: heavy and thick. As I'm drinking it, it feels pretty
Speaker 1: light and delicious. It's definitely sweet and kind of has
Speaker 1: like that caramel e like molasses. Uh for sure. It
Speaker 1: just tastes really roasted dark molasses, just all the good
Speaker 1: things that I like. But it doesn't it doesn't sit heavy.
Speaker 1: I'm not feeling you know, I'll full up with it.
Speaker 1: So Yeah, sometimes I avoid vanilla beers because vanilla can
Speaker 1: be just such like an overwhelming component. Totally chill on this.
Speaker 1: It's perfectly chill. Love it. It's got like just the
Speaker 1: nice vanilla notes. And I'll say too, I really like
Speaker 1: the balance of how sweet it is, Like it's it's
Speaker 1: somewhat sweet with like a nice boozy nous. So like
Speaker 1: what you said at the very beginning of the podcast
Speaker 1: was that it kind of warms you up inside, and
Speaker 1: it's totally doing that right. It's got that boozy nous
Speaker 1: quality that like warms your inerts. It's pretty awesome. Yeah,
Speaker 1: even though it's March, I'll still call this a winter warmer,
Speaker 1: and uh enjoy it. This is like the perfect beer
Speaker 1: for tonight. Man. It's thirty degrees outside right now, and
Speaker 1: I'm happy to be drinking this, no doubt. So thanks
Speaker 1: again to Ryan for the beer, and thanks buddy to
Speaker 1: dog fish Head for taking all the time to make
Speaker 1: a beer this awesome. Yeah, dog fish Head, man, they've
Speaker 1: been around forever. They have. Yeah, they're one of like
Speaker 1: the old school craft craft beer guys, not like Sam
Speaker 1: Adams old school, but like, you know, a couple of
Speaker 1: years after after Sam Adams, dog fish has been around.
Speaker 1: They're like one of the one of the first names
Speaker 1: I feel like I remember seeing out there. They're one
Speaker 1: of my favorite of the nationwide American craft breweries because
Speaker 1: his hand like, they make some awesome beers. And I
Speaker 1: could nerd out right now and go off for like
Speaker 1: ten minutes telling you all the beers I love from
Speaker 1: a dog fish Head. But we're not gonna. We gotta
Speaker 1: wrap up, all right. So essentially the takeaways you need
Speaker 1: to know on how to improve your credit score are First,
Speaker 1: you need to know what a credit score is, and
Speaker 1: it's the tool that financial institutions use to decide whether
Speaker 1: or not to lend you money. More and more, it's
Speaker 1: becoming important, So make sure you're kind of paying attention
Speaker 1: to this. You hear it all the time. It's time
Speaker 1: for you to to look yours up. Why you need
Speaker 1: good credit. It influences the rates you're gonna pay on mortgages,
Speaker 1: car loans, credit cards. It influences whether or not you'll
Speaker 1: be able to rent a home, and possibly whether you'll
Speaker 1: be able to get a job. So the steps you
Speaker 1: can take to improve your credit score, there's five main factors,
Speaker 1: five things that kind of way into your credit score.
Speaker 1: The first and largest one being your payment history. Make
Speaker 1: sure you're paying on time or early. Uh. That's going
Speaker 1: to have the biggest impact on the makeup of your
Speaker 1: credit score. Your credit utilization. It makes up thirty percent
Speaker 1: of your score. And make sure that each card you're
Speaker 1: charging less than thirty percent of the overall available credit
Speaker 1: every month. And you know what, if you can do
Speaker 1: even better than that, it's gonna help your score even more.
Speaker 1: The next thing is the length of your credit history,
Speaker 1: especially if you're younger, you're in college and you don't
Speaker 1: have a credit card, Go ahead and do that now,
Speaker 1: know yourself so that you're not going to get yourself
Speaker 1: into a bunch of credit card debt, But go ahead
Speaker 1: and get that card. Like Joel said earlier, maybe just
Speaker 1: start putting your gas on there so you don't have
Speaker 1: to walk inside of the gas station. Just make that
Speaker 1: happen in the pump and pay it off every month.
Speaker 1: Start building up that financial rep reputation, and that's gonna
Speaker 1: you're gonna thank yourself down the red. And if you're
Speaker 1: seventy years old, do not close your credit card you
Speaker 1: open up when you were twenty, because that's helping you. Right.
Speaker 1: So also, the types of credit that you're using makes
Speaker 1: up ten percent of your credit score. Make sure you
Speaker 1: have a wide variety of different credit available to you.
Speaker 1: Make sure to use it wisely, but have that variety available.
Speaker 1: And then lastly, again this is one of the smaller ones.
Speaker 1: So the one Joel just mentioned was ten percent. Uh,
Speaker 1: this one is also only ten percent. But hard inquiries
Speaker 1: for new credit every time you apply for say a
Speaker 1: new credit card or start shopping for a loan, those
Speaker 1: are gonna come in at hard inquiries and those are
Speaker 1: gonna doing your credit a little more. The beautiful thing. Also,
Speaker 1: there are great tools on the web for you to
Speaker 1: use to help you understand your credit better and to
Speaker 1: know your credit score in mere seconds. So we recommend
Speaker 1: credit scorecard dot Com, a tool from Discover credit Sesame,
Speaker 1: and credit Karma. Those are three great websites that won't
Speaker 1: charge you a dollar which will help you understand and
Speaker 1: know your credit score. We haven't actually talked about our
Speaker 1: credit scores. Let's dive old you wanna like share? Are
Speaker 1: you prepared to to kind of dive into that? Do
Speaker 1: you know yours off the top of your head, because
Speaker 1: you probably do. Actually had to look mine up. I
Speaker 1: had to look mine up. Well, I looked mine up today.
Speaker 1: I'm not so religious about my credit score that I
Speaker 1: could probably tell you on a day by day basis,
Speaker 1: but I do tend to look at it, you know,
Speaker 1: once every two months, and I looked it up today
Speaker 1: in preparation for this podcast on credit scorecard dot Com.
Speaker 1: And I will tell you after you reveal yours to me.
Speaker 1: All right, So even with my seven hard inquiries, so
Speaker 1: don't be like me, don't apply for seven new credit
Speaker 1: cards in the previous twelve months. But I was. I
Speaker 1: got above eight hundred, man, I was that like like
Speaker 1: eight o four eight five, I think nicely. It wasn't
Speaker 1: like right at eight there was like a little a
Speaker 1: little bit up there what you got. We'll keep working
Speaker 1: hard and maybe at some point punk you can to
Speaker 1: the amazing level of eight oh nine like me. So yeah,
Speaker 1: like five points sire than me. Yeah, I'm gonna hold
Speaker 1: that over you for a long time. I'm gonna hold
Speaker 1: it over your head. Here's the thing that, as much
Speaker 1: as we kind of like to joke about that, it's
Speaker 1: not the end. I'll be all. Uh. Some of the
Speaker 1: best credit cards out there that are offerings for me
Speaker 1: that I like to go after, which are the sweet
Speaker 1: sign up bonuses. They are looking for people that have
Speaker 1: high credit score, and typically that range starts at seven hundred.
Speaker 1: And that's what's so crazy is that you can get
Speaker 1: an amazing card with a sweet sweet sign up bonus
Speaker 1: easily five bucks. If you're you know, around seven and up,
Speaker 1: you're golden and real quickly. Three credit score numbers you
Speaker 1: should keep in mind because they are kind of essentially barriers,
Speaker 1: uh in good good markers for you. Six eighty, seven
Speaker 1: forty and seven seventy, so six eighty kind of like
Speaker 1: transitions you into like you know, what, this person is
Speaker 1: pretty trustworthy and go with their credit once you're above
Speaker 1: that number. Seven forty is like, man, this person's killing
Speaker 1: it and they have access to any sort of credit
Speaker 1: whenever they want. Seven seventy is like, you have access
Speaker 1: to any sort of credit, but also at the most
Speaker 1: preferred rates. So I've been in the seven sixties at
Speaker 1: sometimes and it's great, but you kind of miss out
Speaker 1: on some of the slightly better rates if you're going
Speaker 1: for a whole equity line or a mortgage rate. Thanks
Speaker 1: so much for listening to everyone. We really appreciate it.
Speaker 1: You guys are the best and the ladies. Be sure
Speaker 1: to check out how to money dot com. We'll have
Speaker 1: show notices up there, including some of the sites we
Speaker 1: talked about in this episode. And if you like what
Speaker 1: you hear, let us know and please review and subscribe
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Speaker 1: Best friends out, Best friends Out,