Welcome together, we're gonna explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home and a car payment, and you're struggling to get credit cards under control, or you again at a later start in life on saving for retirement, reduce debt increase. wealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments. Hello, Mr. Chuck here, in this episode, I'm gonna be talking about your lifestyle, and how changing your financial lifestyle will help you save money over the long run. What's what do I mean by financial lifestyle? Well, if you have six or seven credit cards that are charged up to the limit, and you cannot afford to pay them off, and that's what I'm referring to, you have too much debt, instead of just talking about debt reduction, which is what you need to do over, you know, over time, but you also need to change your lifestyle, you need to change your spending habits. And that's what I'm talking about. Not only lifestyle, changing for your physical health, it also you can change your lifestyle for your financial health. And your financial health is as important as your physical health. Well, not really, if you're dead, it doesn't really matter, your credit score, why am I talking about your credit score and how to improve your credit score? Well, your credit score affects other things in your life, it affects how much your insurance is gonna cost you, your insurance company is gonna look up your credit score, and they're gonna base your premiums based on your credit score, because they have figured out that your credit score reflects the amount of risk that they're taking in you. So if you have a bad credit score, you're gonna be paying more in insurance. And I'm talking about automobile insurance, homeowners insurance, life insurance, whatever insurance that you're trying to buy, or half your credit score is affecting it. So if you can improve your credit score, you may be able to reduce the amount you're paying for your insurance. And what this has to do was pan off your debt. Well, the more money you can say, whether it's saving by paying less than insurance, the less and interest rates on when you get a new loan, or get a new credit card, the easier it is to keep it paid off, because the less you pay out on interest, the more is going to be applied to your principal. So let's get started on why improve credit score I just discussed. How do you improve your credit score? Well, the first thing you need to know is what does the credit agencies do? And how do they rate you based on your spending habits? Because remember, they don't know how much income you're making. They only know your spending habits. How much is your average balance on a credit card? How many loans do you have? How fast are you paying them down? How many times do you apply for credit? All those things are taken in consideration. My first article is how to raise your credit score by 100 points in 45 days. Well, it's probably not gonna happen in 45 days, but it will start to happen. And it takes time. And right here in this article insurance carriers use credit scores as part of their calculations to determine the level of risk you would pose to them as an insured, they have found a direct correlation between credit scores and claim activity. Knowing that it's important to keep your credit scores in good shape so that insurance premiums stay in line. Here are 10 ways to increase your credit score by 100 points and, most often this can be done within a 45 day limit. Number one, and I've I have two articles, and they both have the same number one, check your credit report and get a free credit report from each of the three credit reporting agencies, Equifax, Experian, and TransUnion. Once a year at annual credit report.com that is a website, you can go to annual credit report.com look for errors that lower your credit score and take action to correct them, review the negative factors in the report and work on improving them, such as paying bills on time or reducing debt. Now when they say errors are referring to somebody that put a claim on your credit report, and maybe it's something that you have no knowledge of, maybe it's something it's not you, like I when I was applying from my first home, and when I was looking on the mic, what really my credit report, but the deed, I guess it was credit report, there are three people with the exact same name as mine, and the same city where I lived. And they had some credit issues that showed up against me. The one person was already deceased. And the issue was back 20 years before I even lived in this city, I had a write a letter or a statement saying that wasn't me and give them reasons why that wasn't me. And the other person was somebody I believe was in jail, or lived on the other side of town. And I had to do the same thing with that. And once I got that done, my credit got cleared up. And then the mortgage company was happy, I had to provide that to the mortgage company where I was applying. And once that happened, I didn't have any trouble. But it stayed out there for a while. So I kept those letters and I think the one I refinanced maybe five or six years later, I had to go through that again, but I already knew about it, so it was a lot easier. Number two, pay your bills on time. set up automatic payments using a bank's Bill Pay service or sign up for an email alerts from your credit card company if you sometimes have trouble paying bills before the due date. Most all banks have online banking now. So you can set it up online. You don't have to go there. If you've been a little bit late one day late, it's going to hurt your credit score. Set up your payments through your online banking and make sure they're paid on the due date. And that will help you improve your credit score. Number three, pay off any collections. Paying off a collection will increase your score. But be aware of that the record of a debt haven't gone into collection will stay on your credit report for seven years. So the faster you can get those collections paid off and the better off you're gonna be better off. If you don't let them get that far. Get caught up on past due bills. If you missed a payment get current as soon as you can. A missing payment can lower your score by as much as 100 points, it may take time for this back mark to fade from your credit report. But take heart Your credit score usually depends more on your most recent activity than on past credit problems. So pay everything on time. Keep bounces low on your credit card. And this is one of the things that never made sense to me you have a credit card and they give you say, a $5,000 limit. But if you spend$ 4,000 of it, and you have a $4,000 balance that's going to hurt your credit score and they're saying here as a rule of thumb, keep the balance at or below 10% in each line of credit to improve your credit score. A bounce close to or over the limit will significantly reduce your credit score definitely don't want to go over your limit pay off debt rather than continually transfer it. While a bounce transfer to pay zero interest to a lower interest rate on your debt can be worthwhile and make sure you pay down the balance before increasing your debt load. FECO says paying down your overall debt is one of the most effective ways to boost your score. Remember you're trying to reduce your debt. We don't want to increase your debt we don't want to create new debt. Now this transfer and balances if you have a credit card that You're paying 20% interest on or 22% or whatever a high rate of interest, and you have another credit card that you've already paid off. And they offer you a balance transfer, say 3% to transfer it trend, there's going to be zero interest for 12 months and then transfer the amount of money to that car that you can have paid off in 12 months, and you will save interest and you can make those payments and and you now you'll pay a whole lot less interest and that is an acceptable to me way to get out of debt. What they're saying here is, don't keep increasing your debt by balance transfer in these balances. Number seven, don't close paid off accounts. And now I have stated this in the past. Once you get a credit card paid off, don't close it because that will hurt your credit score. Closing unused credit card accounts reduce your available credit and can lower your credit score. Keeping them open and unused shows you manage credit wisely and think twice before closing an older credit card account. Because a long credit history improves your score. Then we go number eight shop for new credit over a short period of time. If you're shopping for a mortgage or car loan or a new credit card, you can usually apply for the credit within one or two or three days. And that's not going to affect your score negatively because the scoring system or recognize that you're actually looking for new credit. So look at all those applications as one instead of several have a mix of credit types. They prefer to see consumers with both installment loans and credit cards. If you're repaying student loans or have a car loan or a mortgage, then having one or two credit cards is also a good idea. While having too many credit cards could be a negative factor, you should have at least one to improve, you can handle credit torsionally. Do you have a car loan and a student loan and you don't have any credit card debt they're saying is get at least one credit card and use it sparingly and pay it off every month. Be careful. If you're trying to get out that you probably already have that mix, you just need to get the balances down and apply for new credit sparingly apply for new credit when you actually need it. And that's simply to boost your available credit, opened several new credit accounts in a short time, Frank and lower your score and everything you do affects your credit. having too much credit lease having a too much credit with the balances all high is bad and making late payments is bad. Having something going into collections is bad. That's why when I go to the doctor and I have a big Doctor Bill, I set up a payment plan with the doctor one because they're not going to charge me interest. If I paid him off with a credit card I'm going to be paying interest and it's going to take longer to pay off. So I set it up directly with the medical provider, they usually don't charge you interest, they usually give you a year depending on how much you owe. Um, if you get it set up quick enough they will not turn it over to collections. Those are the things you're trying to avoid. A lot of times if you make a late payment to a medical provider, they are most likely may not be reporting it to the credit bureau is important. So everything you do as you can see your lifestyle and your financial lifestyle needs to be adjusted to bring all these things in together. Once a year check your credit score make sure you got nothing negative out there, make on time payments, don't let your credit card balances get over 10% but another this article. Another article is can my credit score go up 100 points in a month. And what they're saying here is you can have up to 30% be saved and have your credit card balance no more than 20% of what they the credit they give you the can see these links to these articles in my show notes. So what's the number your credit score if it's if he's especially keep it at a high level? Anything over 750 is a good credit score. The credit scores range from zero to 850. So anything over 750, you're in pretty good range. However, if your credit score is a low number, anything under 650, it could add misery to and otherwise happy life. Anytime you want credit, you certainly don't really pay for it in the form of high interest rates. So that's another reason why it's important to keep a good credit score, you can get lower interest rate. I personally knew that my whole life, I've had decent credit scores, I don't think I've ever seen a good rate, at least in my opinion, I haven't seen good rates. I have hadn't paid terribly high rates, but I've always thought I could get I should be getting a better rate. And that's this May. And that's my personal thing. So what's a good credit score? It's like your college exam that you take after high school. And the higher it is, the more doors that open, the more doors opens, the easier your life. Any score above 750 tells the business world you're excellent risks, and you can borrow money at most favorable interest rate numbers between 650 and 750, or gray areas, you're probably offered loans and credit but probably not at the best rates. And that's probably where I was falling into most of my life. fall below 650, you might find it difficult getting a loan or credit line at an especially affordable rate. And just a note, my credit score was 817. I paid off a bunch of debt and went up one point it's 818 now and a bunch of debt was like $ 10,000 in a short period of time, like in three months. Once you get up around 800, it's you'll never make 850 I don't know why they even have that. They'll never make 850 it's very hard. I don't know who does. I know some people have? Definitely I'm not. I'm not trying to get there. But it'd be nice. Okay, raise your credit score fast. And see the quickest way to raise your credit score is an earthen and air and your credit report, same as the other article number one, find in air and any of your credit reports and eradicate it, take care of it, what do whatever you have to do to dispute that debt, especially if it doesn't belong to you. It shouldn't be that difficult. Maybe just write them a letter, each credit bureau will have a course of action you can take to dispute a something on your credit report. Once that's changed, it's possible I have 100 point jump in a month. And that could happen. Laws errors are uncommon, and only about one in 20 consumers have one on their file that could impact the interest on a loan or credit line. So it's important to monitor your score. This in case somebody stole your identity and they're playing for a lot of credit. And you're seeing a lot of credit being applied for on your on your credit report. That's a clue that maybe somebody could have sold you identity. And you want to dispute all that if that's not you doing it. And it says here, in this article, another quick way to improve his credit score is to make payments every two weeks instead of once a month. The increase methods help reduce your credit utilization, which is a huge factor in your score. And that's you know, not going over the 20% of your available credit on a credit card. I get paid once a week. So if I have a item on my credit card did I purchase that dry did the 30 day rule, I put it on a credit card because it's convenient. And then I might make payments on that every pay day until I get that paid off. So it might take six weeks, but then it'll be gone. And it might be three quarters away paid off before it shows up on it in my first statement. And you need to look for credit cards that give you a 20 or 30 day grace period before they start charging you interest. A lot of credit cards charge an interest on the day that you make the charge. So if you can find a credit card that gives you a 20 day grace period, maybe that'll make it to the first statement and you can pay it all off and not paying interest. That's always a plus. The less interest you pay, the better off you're gonna be that is a lifestyle and financial lifestyle. long term strategy for raising your credit score and again It's the same. Don't miss payment deadlines. monitor how much credit line you're using off each card. The textbook consumers use less than 30%. The available credit on their cards are less than $300. On a card with $1,000 limit, the financial world calls it credit utilization. Every step over 30% utilization Mark has a negative impact on your score. This is true even if you make your required payments each month and borrow to pay off high interest credit card debt, you might ask a family member for a loan or find money through an on line peer to peer lender. However, you might find it difficult to get a personal loan from a bank if your credit score is low. And know what they're talking about there. If you go to the bank, that's a debt consolidation loan. A lot of people do it, it's not really reducing your debt you're dis accumulating and paying off all your credit cards and creating one debt. For example, if you have five credit cards, and you owe a balance of$5,000 on each of the five credit cards, and your limit on all five credit cards is $5,000. So you're maxed out, you can borrow money, five times 520 5000 goes a bank, get a personal loan for $ 25,000. pay off all those credit cards, put it into one loan at free, most likely a lower rate of interest, say 6% or 5%. And over time, you could pay off your debt faster, and the bank will make you closed all five of those credit card accounts. That in itself will hurt your credit score initially, but over time, especially if you're making additional payments on that debt consolidation loan. And the faster you get that down from day one, the better your score is gonna look and then be realistic. If you have a big negative on your credit file a bankruptcy or for closer. For instance, your credit score will take a long time recover the best you can do is keep current on your bills, and refrain from running balances and don't close any credit cards if you're not using them closing credit cards reduce your overall available credit, which increases your credit utilization. Conversely, don't open new accounts each time you apply for credit or alone. A cart issue a mortgage lender or auto lender inquires, Credit Bureau for information inquiries made in the past two years can lower your credit score the opposite of what you're trying to achieve. Again, if you're gonna be applying for new credit, say at car loan, do it all close together within one or two days or within a week. And then most they can consider that as one instance of applying for credit. If you do it over a month, once a week for a month, then they're gonna look at well he's applying for credit four different times. That's not good. Make micro payments pay in small amounts wait you owe even before you receive a monthly bill, we're lower your credit utilization. This is what I talked about pay every payday. This technique is especially useful if you buy an expensive item or take a vacation that you charge to your cards. So yes, make a payment that you can afford on a regular basis. Remember the number one if you got a lot of debt. Maybe you've already done a debt consolidation loan and still have a couple credit cards that you charged up since you've done that. Trying to reduce your debt you got to quit creating new debt. that's step number one. Once you stop creating new debt, you got to build up an emergency fund. So as something happens, you have the money to pay for most of it without creating new debt. that's step number two. So you need to stay focused if lifestyle change. Part of reducing your debt is having your finances under control. By using a budget a lot of people are afraid of budgets. I don't know why. A budget is only there to help you. recognize how much money you have coming in from income and other sources. How much money you got going out once you identify where Your money is going to and then you can look at items that pop up. Maybe once a year, like a subscription you got, what am I? What's that? Why am I paying for this and you can cancel those items. And it can save you money. And the most common subscription I can think of as anti virus for your computer. Maybe you had an older computer and you had a subscription that you're still paying for. But now you got a new computer and you got a new prescription, because that's what I always did, because I always forgot I had the other one, then the old one pops up, well, I cancel it, I didn't don't pay it another you know, hundred dollars or whatever it is. Over time that adds up. you review your items your that you're paying on a monthly basis, and you have to think to yourself, do I really need this item? Am I What am I using it? How often do I use it? Can I get by without it? And if the answer is yes, you can get by without it, you need to cancel it and why you want to do that because that's gonna free up some money. Whether on a monthly or quarterly or annual basis is gonna free up money. It's gonna allow you to put more money into your savings account, which over time will help you pay off your debt. That's the end of another episode. I hope you found it useful. And a few you'd like to share this episode with your friends please do so. I'm open for any suggestions for improvement or for information that you would like to talk about in future episodes. He can go to my Facebook page and leave me a message more than glad to comply. To find my Facebook page go to reduce debt increase wealth.com and click on the Facebook icon to go to my Facebook website.