Hey I'm Adam Jusko from ProudMoney.com and in this video I am talking
about how to build your credit and how to get yourself to a place of having
good credit. So I'm going to talk about sort of the components of the credit
score and what to do to get a higher credit score. And we'll also talk about
what to do if you don't have credit and you need to establish credit or if maybe
you have bad credit and you need to get things going again in the right
direction. So, first off, let's talk about credit scores and how they are put
together. There are five components to credit scores, and if you sort of do
these things right, your credit score is going to go higher and you are going to
get approved when you want credit cards or mortgages or auto loans and you are
going to get the best rates when you do. So the very first component, and this is
the easily the most important thing of all, is that you have to pay your bills
on time and, in particular, you need to pay your credit card bills on time and
your auto loans or your mortgage... and kind of installment loans or
debt of that nature. You have to pay on time because FICO, which is the sort of
biggest company that puts credit scores together, that is what they use...
they're using your credit cards, your mortgage, your auto loans in particular,
so you have to make sure that you pay on time. Even if you have a credit card and
you can't pay the whole thing, you have to at least make that minimum payment on
time. The on time is just as important as making a payment
each month --- it's got to be by the deadline because obviously it shows that
you're sort of trustworthy and you can handle things and pay
when you are supposed to. The second thing to consider is keeping the amount
you owe -- on your credit cards in particular -- down to a certain level. Now
different people have different ideas of what this level should be... the industry
standard that you'll often hear is.. don't use more than thirty percent
of your available credit. So let's say you have two credit cards and between
them you have a $10,000 credit line. Well, you don't want to every month be, you
know, knocking your way all the way up to $9,500. You want to keep the
amount that you use at least under 30%. Even if you're paying them off every
month, you really don't want to spend more than 30%. The credit card
companies will give you sort of bigger credit lines, but they don't want to see
you use them all the way to the top... which is sort of crazy in some ways but
it shows that you can kind of handle that credit line without going overboard.
If you're always going right up to the limit and especially if you're trying to
even get more credit, it shows that, you know, maybe either you can't handle it or
at some point you might be a risk if, you know, if you suddenly can't
pay. So even if you're paying it off every month, you don't want to be all the
way up to the top. So again keep your, what they call the credit to debt
ratio at 30% or less. Number Three is the length of your
credit history. Now there's not really a lot you can do about this. If you're
fairly new to credit, you've had credit as long as you've had it.
If you're a little older like I am and you have a longer credit history that is
a good thing, but obviously you can't really make your
credit history longer and that is a component in your credit score and
there's not much you can do about it. So you shouldn't really worry about it for
the most part. The only thing that I will say is that once you have
established credit and you do have a credit card in particular -- we'll talk
about credit cards -- once you have established credit, you don't want to
close those accounts out, even if you're not using them anymore. Say you've got
an older credit card, it's your first one, and now you got a better credit card
or whatever. If you have an older credit card that doesn't have an annual fee and
that account's still open, there's really no reason to close it. If you
do actually close it, you are going to shorten the length of your credit
history. Say you got a card three years ago but you don't want it
anymore and you just got a new card six months ago. Well, if you close out that
card from three years ago, all of a sudden your
credit history goes from, you know, the length of your credit history goes from three
years down to six months and that's not what you want. You want to have a longer
credit history to show that you've sort of been in the game for a while and that
you have been handling credit the way that you should. So that's Number
Three. Number Four is the credit mix. For a lot of people when they're
starting out, the first way they're going to sort of get into credit is
they're going to have credit cards. But over time many of us will, in particular,
have auto loans and mortgages that come into play. And as far as that
credit scoring formula works, if you have loans beyond just credit cards
that's a little bit better, it shows that you can handle different types
of credit and also that you know you're just sort of established in terms of
your life and handling these different things. So the more
sort of types of credit you have and the better you've been handling them, the
more trustworthy you're going to look and that helps your credit score. The
final thing has to do with new accounts. Every time you open a new account
your credit score gets dinged slightly. Now if you're good on everything else --
you've been making your payments, you have a longer credit history,
you have a nice mix of credit, all those sorts of things -- it's really not that big of
a deal when you open a new account. Your credit score might go down a few points
and then you know in a month or two it'll be right back up to where it was
before. But if you don't have much of a credit history, you don't want to
suddenly be applying for seven different credit cards and
running up this, sort of... either running up debt or running up at least available
credit all of a sudden, because it's going to look like you're sort of desperate
for credit. So you don't want to open too many new accounts at one time. And the
shorter your credit history is and the less available credit you have
overall, the worse that's going to look in terms of you opening new accounts and
the greater impact it's going to have on your credit score. So, if you do all those
things sort of right... those five aspects... you're going to have a
better credit score. Some of those things you can do more about than others, but if
you sort of consistently follow that path, over time you are going to increase
your credit score and you're going to be eligible for more credit
products and you're going to get better rates when you do. So now the other thing
we want to talk about then... well let me back up for just one second. Sometimes
you'll see online people talking about how you can, you know, improve your credit
scores really fast. There aren't really that many ways to do it. If you have a
really bad credit score, you know, there's the possibility that you can
sort of percentage-wise increase your credit score over a fairly short time
but for the most part it takes some time to build a credit score. It's not
something that's going to change overnight. But one thing that you
should do, especially if you have a bad credit score or you don't really
understand why your credit score is not as good as it might be, is you should
check your credit reports. Now there are three credit bureaus: there's
TransUnion, Experian, and Equifax that have a record of the credit
cards that you have, the applications you've made in the past, and all that
sort of thing. So they kind of have this record of you, and you can get it for
free. There is a website AnnualCreditReport.com
that you can go to and you can request, once a year, your credit report from all
three agencies. So you can check on that credit report and see if
what is being reported is actually, you know, what your history is. Sometimes if
someone has a similar name to you, you might find out that there's
some account on your credit report that's really not yours or you might
find out that an account that you thought was closed down is still showing a
balance even though you paid it off. So it's good to check that and make sure
that there's not something erroneous on your credit report that could be hurting
your credit score. So, all that said, for some people,
you may either not have a credit history, so you want to establish one, or you may
have a bad credit history and you want to obviously make it better. The way
that I suggest to most people... whether you are new to credit or whether
you have a bad credit history... is to get a secured credit card. Now a secured
credit card works just like a regular credit card except you have to put a
deposit down -- which is refundable after you don't want or need the card anymore.
It's sort of like getting an apartment --- you have to put a security deposit down,
you live there, and then when you move out... as long as you haven't trashed your
apartment... you'll get that security deposit back.
A secured credit card works the same way: you put a deposit down, you get the
credit card, you use the credit card... when you either don't want it anymore or the
credit card company sees that you're reliable and they then decide to
give you a regular unsecured credit card, you'll get that deposit back. So, normally,
you put down the deposit and the amount of your deposit is the
same as your credit line that you're going to get. So say you put down, you
know, five hundred dollars... you're gonna have a five hundred dollar credit line.
Now you still have to pay your bills every month just the same way you would
with a credit card. That five hundred dollars that you put down, that deposit,
is only a backup. So you have that five hundred dollars but say you
spend three hundred with the card in a month. The next month you're paying that
three hundred dollars out of your own money, not out of that five hundred
dollars that you put down in that initial deposit. So, over time, if you have
a secured credit card... most secured credit cards are going to report to the
major credit bureaus and so then that is a way for you to build your credit ---
either to begin building your credit or to build your credit if you
have a poor credit history. That security deposit is a little backup for the bank
to make sure that you're going to pay. Because if you don't pay, eventually they
will take it out of that deposit, So that is sort of good on both sides... it helps
you build your credit, but it also gives the bank a
safeguard until they can kind of trust you and know that you are going to
pay your bills on time. And the good part about that is, for most banks --
especially the bigger banks -- they're going to kind of watch your history
with that secured card, and many times they will actually give you... they'll
either return your deposit if you're making your payments on time or they
will upgrade you essentially to a new unsecured card that works just like
any other credit card on the market. So that is it. Please go to ProudMoney.com
for other financial articles and "best of" product lists and all kinds
of other good stuff too. Thanks.
For more infomation >> 7 Reasons Your Church Should NOT Use Squarespace To Build A Website | Pro Church Daily Ep. #048 - Duration: 12:14. 
Không có nhận xét nào:
Đăng nhận xét