ReduceDebtIncreaseWealth.com welcome and Mr. Chuck here. Over the past few weeks I've given you the plan and your plan should be to reduce your debt as quickly as possible to save as much money on interest as you possibly can. The less interest you pay, the more principal your payments will be applied to. And this will help speed up your your debt reduction plan. So yeah, keep that in mind. You may be thinking about refinancing your mortgage or doing a debt consolidation or using a debt cancellation company. Before you do that, you need to have a plan in place. Remember, you're trying to reduce your debt as quickly as possible without costing you more money. That should be your main focus on your plan. If you follow the things that I've been telling you to do one, have your finances under control, know how much money you got in your checking account, have a savings account set up where you put your discretionary income, your extra money into your savings account, you're building up an emergency fund, you're making minimum payments on all your loans and credit cards. You try to get that payday loan out of out of your life for good. Those are the things you should be focused on. And that needs to be focused on before you consider refinancing your your mortgage or having a debt consolidation loan or using a debt cancellation company. We're going to talk about all these factors. But before we get there, you need to know your credit score. If you don't know what your credit score is you need to go online and look Get up. A lot of credit card companies provide the credit score the your credit score for you on a regular basis like I have a capital one credit card. And it's when I log into my account, it has my FICO credit score. And what is a FICO credit score? Well, I got an article that I'm going to be sharing with you here in a little bit. I have a sponsor to try to offset some of the costs of this podcast. So that's what I like to talk about next. If you take vitamins, you should be taken isotonic liquid, it gives you rapid absorption, it's fairly easy to swallow, you get highly concentrated nutrients when which gives you the maximum benefits. It's much better than the pill vitamin because it gets into your system at a much faster rate and more of the vitamin gets into your body where your body can use it. I've been using it for five years now. I it's highly recommended it. Learn more about isotonic vitamins, go to my website, Reduce Debt, Increase Wealth.com dot buzzsprout.com upper right hand corner, click on the heart and I'll take you to an isotonic website which belongs to my wife and help support to show thank you very much found an article experian.com that explains the credit score what it is. And then when I get done with that, we're going to talk about things that affect your credit rating and what you can do to help your credit rating so let's go through the article first. This report is from Experian what is a good credit score for a score with a range between 300 and 150. A credit score of seven or above is generally considered good score of 800 or above in the same range is considered to be excellent. Most credit scores fall between 600 and 750. higher scores represent better credit decisions can make creditors more confident that you will repay your future debts as agreed. credit scores are used by lenders including banks providing mortgage loans, credit card companies and even car dealership financing auto purchases to make decisions about whether or not to offer you credit, such as credit card or loan and what the terms of the offers such as the interest rate or downpayment will be. There are many different types of credit scores. FICO score, and scores by a vantage score are two of the most common types of credit scores. But industry Pacific scores also exist. What is a good FICO score, one of the most well known types of credit scores or fica scores created by Fair Isaac Corporation. fica scores are used by many lenders and often ranged from 300 to 850. A FICO score of 670 or above is considered a good credit score. While a score of 800 or above is considered considered exceptional 67% of Americans have a good FICO score better 300 to 579 very poor 16% of people. credit application may require a fee or deposit and application for this rating may not be approved for credit at all. 580 to 669 fair 17% of the people. Applicants with scores of this range are considered be subprime borrowers 678 to 739 good 21% of the people, only 8% of applicants in the score range are likely become seriously delinquent in the future. 740 to 799 Good 25% of the people, applicants for scores are likely to receive better than average rates from lenders 800 to 850 exceptional 21% applicants were scoring this range or at the top of the list for the best rates from lenders. What is a good vantage score? scores wise Vantage score also types of credit scores that are commonly used by lenders. The Vantage scores was developed by three major credit bureaus and killing Experian, Equifax and TransUnion. The latest Vantage score 3.0 model uses a range between 300 and 850. Vanney score above 660 is considered good while a score above 8780 is considered excellent 61% of Americans have a fair Vantage score or better ranges credit score 300 to 499 very poor 5% of the people. Africans will not likely be approved for credit 500 to 600 range Pour 21% applicants may be approved for some credit although rates may be unfavorable in with conditions as much larger down payment amounts 601 to 660 fair 13% of the people, applicants may be approved for credit but likely not at a competitive rate. 661 780 good 28% of the people Africans likely to be approved for credit at competitive rates 781 to 850 excellent 23%. Africans most likely received the best rates and most favorable terms on credit accounts. Why credit scores matter? credit scores are decision making tools that lenders use to help them anticipate how likely you are to repay your loan on time. credit scores are also sometimes called risk scores because they help lenders access the risks you won't be able to repay the debt as agreed. Having good credit is important because it determines whether you qualify for a loan and depending on the interest rate, The line you qualify for, it could mean the difference between hundreds and even thousands of dollars in savings. A good credit score could also mean that you're able to rent the apartment you want, and even get the cell phone service you need. Think of your credit score like a report card you might review at the end of a school term, but instead of letter grades, your activity ends up when within a scoring range. However, unlike academic grades, credit scores aren't stored as part of your credit history. Rather, your score is generated each time and Lennar requested according to the credit scoring model of their choice. Every time you set a major financial goal like becoming a homeowner or getting a new car, your credit is likely to be a part of the financing picture. Your credit score will help lenders determine whether or not you qualify for a loan how good the terms of loans will be, however, that credit scores are usually not the only thing lenders would look at when deciding to extend your credit or offer you alone. Your credit report also contains detail which could be taken in consideration, such as the total amount of debt you have the types of credit in your report, the length of time you have with credit accounts and any degree, Gregory, I can't say that word marks you may have other than your credit report and credit score's lender may also consider your total expenses against your monthly income, known as your debt to income ratio. Depending on the type of loan you're seeking factors that affect your credit scores. The information impacts that credit score varies depending on the scoring model being used. credit scores are generally affected by elements in your credit reports such as payment history for loans and credit cards, including the number and severity of late payments, credit utilization rate, type, number and age of credit accounts, total debt, public records such as bank Rep see how many new credit counts you recently open number of ink inquiries on your credit report. FICO score factors most influential payment history on loans and credit cards. highly influential. total debt and account owed moderately length of credit history less new credit and credit next vantagescore. Most payment history highly age and type of credit percent of credit limit use moderate total balance and debt, less recent credit behavior and inquiries available credit credit scores do not consider the following information your race color, religion national origin, sex or marital status US law prohibits credit scoring formulas from serving these facts any receipt of public infirm assistance or the exercise of any consumer right under the consumer credit protection agent act. your age, your salary, occupation title employer date employed your employment history. However lenders may consider this information and making our overall prove decisions where you live. Soft inquiries soft inquiries are usually initiated by others like companies making promotional offers of credit, or your lending conduct thing period, periodically reviews of your existing credit accounts. Soft inquires also occur when you check your own credit report or when you use credit monitoring service from companies like Experian decent queries do not impact your credit score, how they improve your credit scores. If you reviewed your credit information and discovered your credit scores aren't quite where you thought they would be, you're not alone. Since your credit scores use information drawn from your credit report, your credit activity provides a continually updated basis of data about how responsible you are with the credit your current Using at Experian, we provide information that can help you see your credit in new ways and take control of your financial future. You can learn more about how choices you can make to improve your credit. Why using secured credit cards can improve your credit history when a credit what a credit repair service can and can't do for your credit, how to protect or restore your good credit after major life events like marriage divorce and or death of spouse. Why knowing your fighter score is important when you consider making a purchase. When you know that kinds of activity or credit that can affect your scores you can work to better take care of your credit to things like late payment liens or bankruptcy all have varying levels and impacting your credit scores and serve reflected on your credit report to getting familiar with your credit report and help you see the impact of these kinds of events you have in your credit. Again experian.com I found that article online there A lot of good information in that article. So it might be worth your while to go online Experian comm and read it for yourself that if you have a good credit score, it makes life a lot easier. Because there's everybody uses your credit score. If you go to buy a used car at a car dealer or a new car, they're going to look up your credit score, or credit rating, I think I refer to rating earlier but it's score ratings the same thing. Your insurance company is going to look up your credit rating. Your insurance premium is based on your credit rating or score. So the better credit score you have, maybe you get a better premium on your car insurance, your home insurance and all your insurance needs. So how do I improve it? Say you have a rating around 606 50 and that's not bad. It's good, but you can do better well The first thing is do you make all your payments on time? And I say all I mean, everything that you pay would be your, your mortgage, your car loans, your credit cards, even though it's making the minimum payment or not looking at how much you're paying it just looking, are you making payments, and are you making them on time and that we're also looking at utility companies store credit cards, which are not really that great. Any buddy that you pay on a regular basis, you need to pay on time, which was no later than the due date. That's a start. Once you've established that, over a period of a couple months, your credit score will go up. If you've been having troubles in the past. If you have a lot of debt and you are having trouble making all your payments Time, the ones that you've been laid on, you need to try to prioritize them. For instance, what I did when I was struggling is if I had a doctor bill which I had a lot of doctor bills because I had some medical issues. So I paid all my credit cards, minimum payment, and I called the hospital. I had a big bill, or I called the doctors and I told him, I can't pay it but I also want to set up a payment plan I'll pay 20 bucks a month. And when I get more money, I'll pay and we'll just keep working at it. And that worked when you do that they don't report that to a credit bureau. After you start making your payments on time. The next thing they look at is the oldest credit line. The longest you have an credit lines open, the better it is now why I'm telling you don't close down some credit cards you pay off your credit cards you don't want to cancel. Now the room if you're a guy really bad credit or you got a whole lot of credit, the credit card company may cancel you anyway. But if they don't, don't cancel it yourself, you don't make any effort you don't do it. Because the oldest credit line The longer you have something open as far as credit, the better off you're gonna be. Then the next thing they look at number three is credit used. The less credit you use, even though you may have it available, the better off your score is gonna be. So what they want, they want you to make an on time payment. They want you to have a line of credit open for a long period of time and they don't want you to use it don't make much sense you know everybody listen his podcast probably You're struggling to pay off debt. And you probably have a credit score that maybe not as good as you like. I always thought that was ridiculous. But the as you pay down your debt and you get those zero, your credit rating is going to go up. One of the numbers that they look at is 5%. So if you have a credit card with a $5,000 limit, don't want to take it over about $500. So, use it sparingly. Credit cards should be used like cash, meaning if you use it, you pay it off the next cycle payment cycle. Number four that they look at is recent inquiries. Now the article touched upon soft hits hard hits. If you go out and start applying for like 10 different credit cards, those are going to be hard hits. If you do that within a week or two, you know, close together, that's going to impact your credit score and your rating will go down. So that just keep that in mind. If you check your own credit score, that's a soft tip, and that is not necessarily going to hurt you. Another soft hit would be if when a credit card mails you an offer, offering your credit card that you can apply for it. Well, they already checked your credit, they know that you may be a good risk. That's also considered a soft hit and doesn't impact your score. And another thing that impacts your score is new accounts. Have you got a new credit card recently? Have you got a new auto loan recently have you I think they might even say refinancing a mortgage. You've been in your house 30 years and you refinanced it recently they're gone that that's may or may may not have an impact, but most likely is gonna have an impact. And then what they look at is available credit, the more credit you have, that you're not using, the better off your credit score is gonna be. So pay on time. Don't use it very much. Keep it a long time. Don't apply very often. And don't set up new accounts to too close together and have a fairly large amount of credit and maybe you'll have a credit score around 800 825. Getting up to 850 is almost impossible. So with that said, Keep at it, keep working on your debt. Stay focused, and next week I'm going to talk about refinancing and debt consolidation debt cancellation. New episodes are released where Please subscribe so you can follow Mr. Chuck's journey to reduce in debt and financial freedom as you do the same. If you liked this podcast, please share Transcribed by https://otter.ai