Here are 6 steps to help you improve your credit score TODAY!
Budget Template: https://maxmymoney.org/startabudget
Credit Report: https://maxmymoney.org/freecreditreport
Hey, guys, Max here, I'm going to go over six steps on how to get your credit better right now, starting today credit is used for so many different things, it's almost impossible to live in this functioning Western society without a really good credit score.
So here we go. The credit score is broken down to five different categories. The most important is being your payment history. That's about 35 percent of the score. Next is total amount owed 30 percent length of credit history, 15 percent new accounts and inquiries, which is 10 percent. And then Mixture, which is 10 percent. Credit cards, mortgages, personal loans. Focus on the ones you can control. So if you're young, you can't really, you know, pretend or become 10 years older to have a longer credit history.
But you can work on the most important, which is the payment history. It's 35 percent, about one third is based upon payment history. So keep making those payments on time and in full. And you can always make sure to keep your utilization down, make sure your amounts are nice and low. Creditors love to see that. And even if you have a terrible credit score, have made mistakes, have made bad financial decisions. We've all been there, me included.
Don't fret, because this little guide is going to help you make incremental progress. You make these changes today and throughout time you'll see the progress. People ask, why is credit important? Why can't I just pay everything in cash? Can't I just do everything on my own? Well, if you're independently wealthy and don't need credit, all the power to you, don't pay cash. Most people do not, though. And the reason why credit is so important is let's use this example.
Let's say you buy a $200,000 house and you take a mortgage. Let's just make sure there's no down payment it's thousand dollars is the loan. 200000 dollars at three percent is about eight hundred forty bucks monthly. Now, let's take that same example that two hundred thousand dollar loan and bump it up to four percent, simply a one percent difference, which is pretty much the difference between a really good credit and not so good credit. two hundred thousand dollar mortgage at four percent is nine fifty four a month, which means over the life of the 30 year loan, you're going to pay over forty thousand dollars more.
That's crazy. So although it's a small percentage, it's really one percentage point, it makes a huge difference over the life of the loan. That's why having critical important because you want the three percent, you want to save that 40 grand to put in your pocket to do it if you want to do with it, not giving it to a large bank or small one. I just can't believe that 40000 dollars over one percent, that is absolutely crazy.
Good credit is really important. Make sure to hit that like button, subscribe and comment to make sure this video can go to as many people as possible because I love seeing those comments. OK, step one is to start a budget or if you already have one, fine, tune it. I bet you you don't have my template and go to the link in the description. You will find this template. It's very, very, very helpful on fine tuning and really getting the budget down to the nitty gritty so you can make sure you're on the right path.
It should have this video. This video is a few steps. This one is a five step way to start a budget like his own description. Make sure to click it and make sure to go download that resource. It's a whole entire template makes it super easy to go through each line item you have in your budget and make sure that you are on the straight and narrow.
Starting a budget is very, very, very important. If you think you're going to have success without writing things down, without documenting things, you're wrong. You need to document it. And if you can keep everything in your head totally straight 24/7, I need you to send me an email because I need someone to help me with that. OK, so now you started the budget are fine tuning. That's great. Ninetta, organize your finances. I use a spreadsheet which is filling a description.
However, I also use two applications. One is called Mint and one is called credit. Sesame Mint helps me see all my accounts on my credit, credit accounts, mortgage, bank account, everything in one space so I can then take that information and impose it onto the spreadsheet so I can have it in two places. Yes, I know it's kind of a pain to have it in two places, but Mint doesn't categorize things and have things as I want them really appropriately how I do it a little differently.
So having mint and then having the spreadsheet are in two places and it makes everything really super organized. And then keeping track of your credit score is really important and keeping track of things that are happening. So I use a service called Credit Sesame. It takes 90 seconds to sign up. You don't need to put a credit card in and the link is in the description. OK, so after you've signed up and after you've you're in credit sesame, I'm going to show you guys how I use it.
So this is really simple. You simply go to credit sesame. It's what you'll see, you'll see different things, my overview of my actions offer sesame cash on this, all the stuff I only really use it for two different things. The first one is just the overview shows of the credit score shows you what's going on throughout time. You can see how it goes up and goes down. Now, this is. No mortgage and then mortgage, it's gone down quite a bit recently, but it doesn't really matter because now I have now I have the mortgage, which is what really matters.
So I use it for two things. The overview, which is your credit score here. It's super easy to keep track. I think it updates three times a month for every every 10 days. Then if you go to scroll down, go to what's impacting my score. Now, this is important.
So click on that. It shows you all the different factors that are tied to the five different factors payment, the history of credit usage, age mix and credit inquiries. Now it looks like I'm not a straight-A student, as I thought I was. It shows everything. Your payment history, how I've never missed a payment credit. You said about five percent have all my credit is and then the mix and then credit cards. This is really helpful because you can see if any inquiries have happened that should not be there.
And a lot of times there are weird things on credit reports that should not be there.
So you for those two things and then the other one, I use it for the other. The other option here is notifications. This shows you every little thing that's happened like this. Oh, OK, that's good. Credit score decrease for some reason, probably the mortgage increase, all these different things that shows, oh, you paid off in account. These are really, really helpful little notifications. And I've definitely use them, obviously not as much as I should, but it shows it shows you everything that you need to know on what's going on in your credit report.
So if you see anything weird, then, you know, to dispute it. So that is credit sesame. Make sure to go to the link in the description. Sign up and let me know how it works out. OK, you have your budget fine-tuned, you've organized your finances through meant the spreadsheet and credit sesame next are going to do is lower utilization below 30 percent. Yes, 30 percent is used. The numbers yourself then. But remember this, less than 30 percent is good.
Over 30 percent means there could be an adverse effect. I do my best to keep it below 10 percent. I don't keep that perfectly because I've worked purchases. But if you can keep it below 30 percent, even below 10 percent, that shows creditors that you congratulations are good with credit and you are able to utilize it in a way that shows you are prudent and mature, not maxing your credit cards every single month, because that is where creditors think, hmm, if you max out to the very, very end and an emergency happens, what are you going to do?
Well, and their mind if you max it out and have emergency happen? Well, you can't use the credit card, which you're in trouble and you might not make that payment, which means you're kind of starting to go down further. So make sure to utilize your credit wisely. Below 30 percent, ideally below 10 percent. Next step, you need to pull your credit report. The only way you can actually see anything on the card is actually pulling it.
There's another link in the description. Go to it. You can pull it for free. This is the only website. You can pull it for free once per year. The government actually instituted that. So it's not a scam. It's something weird. Go to the website and you can pull your all three. All three is important if you just have one that only shows one. There's three credit, three major credit bureaus in this country, the US that you want to pull and be able to pull all three and make sure to go through every single one.
Yes, it's not fun to go through. It's really long. It's like, I don't know, 10, 15 pages a piece. So you're going to go through a lot. But a lot of it's just, you know, your information, your addresses, the accounts, how much your balances are things of that nature. But go through and make sure that everything should be in line. Everything is in line. And if it isn't, then you need to reach out directly to those credit bureaus and you can just search on the Internet how to do that.
It's really simple, funny story.
I had a friend who who pulled his credit report years years ago, and he found something very odd. He found on his credit report a pass to delinquent mortgage for somebody he didn't even know. Now you think, how the heck did that happen? He has no twin. He has no siblings of that nature. So you thought how did that happen? Well, it's because the guy's Social Security number was one digit different than the guy who actually took out the mortgage.
So I don't know if that was just an error on the credit bureau bureau's part or this mortgage has been in my friend's name the whole time when it should have been somebody else's name, different name, different city, different state was crazy. But anyway, he disputed that and got his credit report. And that's a matter. So make sure to check that out, because the last thing you want is to having a terrible credit score, not knowing why, and then paying more for credit, like I said.
And the other example, forty thousand more over the life of loan. That's a lot of money for someone else's mistake. So make sure I do it. It's up to you to actually dispute it and know what they'll do for you. So make sure it's right. I know you have credit sesame now you have many of your spreadsheet all set up. Very, very good question of the day. What is the most surprising or weird thing about credit?
Now, this is my two cents.
In order to be a good credit risk or good credit profile, you actually have to have some type of debt. But the reality is this. If you paid everything off in cash and never had to have any credit whatsoever, what did that show the. That you're the most likely to pay back a loan. Just a thought, you have to actually be on on the books in order to qualify for a loan, but why is that the case for people who pay cash for everything actually have the best financial position?
That's why I find this odd one here. You have got to think, well, I want to make sure to make all your payments on time. Every single one. That's 35 percent of your score. Challenge yourself, show yourself some self-discipline. The next time you think about buying something, whatever it is, whatever it is, truly, I can pretty much guarantee you you have every need in your life met. Almost everything you want is a want.
Everything you want is everything you think you need is a want like me. Everything I must. Almost everything I think I need is actually the one so so yourself and self-discipline. Don't buy it. Put it in the filing cabinet of your brain, and I bet you after a week or two, you won't even remember you were going to buy it. Now, if you do remember it and it is really that important, then don't think about it anymore.
Just buy it. But don't buy on credit.
And even when you really think you need it after this couple of weeks, really prudently think about it and maybe even ask a trusted person in your life, is it actually any good thing or just go back and think, do I actually need this? If the answer is no. Just forget about it. Put in the file cabinet and move on. There are so many other things to focus on than things that you think you need, but you actually just desire.
You're stronger than you think and now you can do it. I've been on both ends of the shopaholic and also the super stingy. It's better to be somewhere in the middle. So if you're somewhere in the middle, great. If you're on the other end of the spectrum, figure out how to make it a little better. Make it more in the middle, less stop sign. Love all your shopping accounts, all your online accounts that you buy anything from.
I don't care what it is. Don't think twice about it. Go out, sign up right now. And as you're signing all all those accounts, put all your credit cards, every single piece of plastic you have in your wallet. Put it in your drawer, go in your room, your bedroom, go to your bedside table, go to your closet, put in the car and don't even think about it, don't think about this. This alone has saved me.
I don't know how much money, but a lot because I realize that if I don't actually have a purpose in having the credit card or having a debit card, whatever it is, it's in your wallet. If I don't have purpose for the visit there. Well, it doesn't need to be there. It shouldn't be there. And I've realized that when the debit, debit or credit card is not my wallet, I spend a lot less money, a lot less money on stupid, knickknack things I really don't need.
So the adage goes out of sight, out of mind. When you have a purpose, grab it to use it. When you're done with it, put it back. It's only that simple. And I say it's that simple, but it's not that easy. It's simple to do these things are not do these things. You have to figure out what's important to you. And if financial independence, freedom is important to you, then put the credit cards in the room right now.
Well, those are my things. Those are how I have made it up to eight hundred eight hundred club and then back down. Thanks, Mortgage. Thanks. Appreciate that. Those are my my steps. And that's how you're going to improve your credit score. Make sure to get that budget very, very fine tuned and make sure to sign up for credit sesame. The link, the links are in the description. Go sign up. It's really helpful and monitoring and making sure you keep track of everything.
Check all the links in the description, make sure to like comment and subscribe. And I will see you guys on the next.