How to Fix Your Credit Score Fast!

In today's video, I will teach you how to fix your credit score fast. I had a very bad credit score, but now I've boosted it up to 846. So first I'm going to show you my credit score, and then I'll teach you how to fix your credit score fast. So let me show you this. I'll open up my app. I'm sure you have something similar. My credit score is 846 out of 850, and this is coming from Experian. You can look at my one year history. It's been good for the past year. So here's how I have an 846. This is not to flex who brags about their credit score. This is for educational purposes. You have to pay your bills on time. This makes up 35% of your credit score. I have zero late payments. This wasn't always the case, but I learned my lesson. Now moving on to my debts. So I am using 1% of my available credits. My total revolving debt is a whopping $900. Now moving on to credit history. The average age of my accounts is 7 years. My oldest account, that's my credit card, is 19 years old. So that's why it's important to get a credit card when you're young and keep it active. So next is what's preventing me from having a perfect credit score. It's the hard inquiries. So I really wanted these two new credit cards because of the rewards. One was mileage. Another was 5% cash back at a store. I couldn't resist. But now I have two hard inquiries. Now moving on to types of credits. I have eight revolving accounts, which I barely use, $900 in debt. I have seven installment loans on some of my rental and commercial properties and no car payments, fortunately. Living the dream, living the good life, right? So my credit score is 846. Now let me tell you how I did it, how I fixed my credit score. You need to check your credit report regularly. When my credit score was bad, it shot up by more than 100 points overnight. So I'll tell you what happened. So there was a fraudulent charge and that balance got sent to collections and it was on my credit report and that destroyed my credit score. If you identify an error on your credit report, you can dispute it and get it fixed. So the credit bureaus are legally obligated to attempt to fix the mistake. So I did this and it boosted my credit score. Contact a credit reporting agency. You can do it online. You don't even have to speak to a human. Explain the discrepancy in writing. They will ask for some documentation, give them what they need. And if it is an error, they will remove it. It's going to be an instant boost to your credit score and it can be significant. It was for me. So I did not check my credit report regularly and that was a big mistake. So I should have known better, but nobody told me these things. So now I'm telling you. So this leads to a very interesting question. Do you need a credit monitoring service to alert you of suspicious activity? So personally, this is just my opinion. I don't think so. I do not subscribe to those services and I'm just, I'm doing fine without it. A lot of the banks, a lot of the credit card companies will give you automatic alerts for free. So just make sure that they don't end up in your junk mail. And just so you know, there's so many of those businesses, you've probably seen those ads that claim to fix your credit for a lot of money and it's usually a rip off. They mostly look for errors on your credit reports, but you can do that by yourself for free and it's very easy. It's so easy. So the reason why those companies are in business is because so many people have errors on their credit reports. The Federal Trade Commission says that 25% of Americans have errors on their credit reports. So you can get a free copy of your credit report through Experian, Equifax, and TransUnion. Again, I fixed an error. My credit score shot up significantly overnight. Another way to boost your credit score is by requesting a higher credit limit. So I do this all the time. I get bored of my credit card app and I request more credit. That's just what I do. And then the auto message pops up saying that you can only request an increase every 12 months. Please stop asking. But I just, you know, I can't remember when I last requested it. So I just keep on requesting it and it's bound to work one of these days. Anyways, the reason why I request a higher credit limit is because it helps my credit score. Here's why. So for example, if you owe $900 and your credit limit is $1,000, then you are utilizing 90% of your available credits. And that's a very bad look on your credit reports. 90% utilization. But if you request a higher credit limit and it goes up from, let's just say $1,000 to $10,000, then your credit utilization would fall from 90% to 9%. And then you would look much better. But listen, I want to tell you this. If you have an uncontrollable spending problem, then do not request a higher credit limit, please. Number three is that you have to pay your bills on time. So I'm going to tell you the truth. When I was young, I don't know what I was thinking. So sometimes I would owe money and I just, I just wouldn't pay it for whatever reason. And I always thought, you know, what are they going to do to me? You know what they did? They sent me to collections and it showed up on my credit reports. And then I got labeled as a delinquent and then it destroyed my credit score. So don't be like the younger version of me, just plain irresponsible. So please pay your bills on time. Sometimes, I don't know if you do this, but this is just me. When I owed money for a service or a product that I was unhappy with, you know, I was a dissatisfied customer. I would just not pay the bill to prove a point. And that did not have a happy ending. So don't try to be a hero. I know that you may be a person, a principal just like me, but sometimes it's just not worth it. It's not worth your credit score suffering. If you have a late payment, it's going to remain on your record for seven years, seven years is a long time. You know, what happened to forgive and forget, right? Well, you know, they'll do that after seven years, but here's how it works. You're late on a bill. It gets reported on your credit reports and your credit score falls significantly. If you're late 60 days or longer, that's going to hurt your credit score more than being late 30 to 59 days. So please watch out for that. But you need to know this. Even though the late payment stays on your credit report for seven years, right? It doesn't mean that your credit score will be low for seven years. Your credit score will quickly begin to recover little by little. If you make your payments on time. So I have witnessed this with my own eyes. So even with late payments on your record, you can begin the repair process. Here's another quick fix for you. The credit reporting agencies make a big deal about credit card balances. So it's important that you bring these balances down. And if you want to know how to reduce your credit card balances, I have dedicated a video to this. They are legit methods. There's no sales pitch. I'm just trying to help people out. So please check out that video. I will leave a link down below. Number five is do not close down your old credit cards. You may think that it's a good idea to close a credit card that you're not using. But no, that is a bad idea. That hurts your credit score. Even if you're not using a credit card, please keep it open. So here's why. So I showed you how they judge you. They look at the age of your accounts. They look at your credit utilization. If you close a credit card, then you are hurting both of those factors. So I understand your two concerns. So number one, you want to close down a credit card because you have a different credit card that gives you better rewards, right? You've upgraded and you went to greener pastures. I get it. But please just keep your old credit card open. And number two is that you want to close down your credit card because you're afraid of identity theft or fraud. But just do what I do. Just don't carry that old credit card around. Put it away in your secret stash and just forget about it. So I'm telling you to keep your old credit cards open, but there are exceptions. If you have a credit card that you don't use, but they charge you an annual fee, then yes, you should consider closing that credit card because that sounds like a big waste of money. Also, some credit card companies will terminate your card due to inactivity. So if you want to avoid that situation, put a monthly subscription charge on that credit card or just use that card every once in a while. Another idea is becoming an authorized user. So I'm going to be honest with you. I'm hesitant to bring this one up, but people always bring this one up as a way to boost your credit score. Personally, I never did this and I'm just really going to fly past this one because who's really going to vouch for you like that? Because you're asking a friend or you're asking a family member for access to their line of credits. So that is a big ask. It's like, hey buddy, I have bad credits, but can you give me access to your credit card? So it's a hard sell. I find it unrealistic, but if you can persuade someone into doing this, then that is awesome. Number seven, you must stop hurting yourself with hard inquiries. So sometimes there's no way around this, like when you need a mortgage, but if you're trying to fix your credit score, don't unnecessarily seek out hard inquiries. So hard inquiries damage your credit score and they stay on your credit report for up to two years. Now if you're serious about improving your credit score and you want a better understanding of how they judge you and come up with your credit score, then this will be very helpful to you. Now let me tell you what you need to do to improve and maintain your credit score. So I want you to understand the fundamentals. I want you to understand how this works. So your credit score tells third parties how likely you are to pay what you owe. So your credit score is based on your credit reports. Your credit report includes your activity and history based on information from financial institutions, credit card companies, and lenders. So your financial activity is compiled into a report and a formula is used to create your credit score. And this formula is based on five factors. Your payment history makes up 35% of your credit score, amounts of debts or utilization 30%, length of credit history 15%, credit mix 10%, and new credit 10%. Now let me give you tips on how to boost your score on each one of these categories. Your payment history makes up 35% of your credit score. So this is the most influential factor. To become and maintain super prime status, you need to build a history of on-time payments. Just think about it from the perspective of the lender. If you are asking to borrow money to buy a vehicle or to buy a home, then the lender wants to see that you have a strong track record of making timely payments. Your payment history includes activity from your credit cards, auto loans, mortgage loans, and delinquent accounts. Your payment history is also going to be affected by activities in collections and bankruptcies. So listen, if you're late on a bill, that's going to stay on your credit report for seven years and that's going to significantly lower your credit score. But if you make your payments on time, then your credit score will begin to recover gradually. After seven years, a late payment will completely fall off your report. Here is a general guideline about your payment history. You are considered excellent if you make 100% of your payments on time, 98% to 99% on time is good, 90% to 97% is considered average, less than 90% on time is below average. Now I'm going to give you advice in each one of these sections, but here it's very straightforward. You need to pay your bills on time. If you have a late payment, then yes, it's going to hurt your credit score. It's definitely not good, but it's not going to be the end of the world. So personally, I've made late payments in my life. It happens for whatever reason, but just don't make it a habit and you'll recover. So it's happened to me, but now my credit score is super prime. So please make it a priority to pay your bills on time. So I want to tell you this, I showed you my credit info and you saw that I've been very good about making my payments on time. This is definitely the most important factor. So please be diligent about this one. The amount of debt that you owe is the second most influential factor. This makes up 30% of your credit score. This is also known as your credit utilization. Credit utilization is how much of your available credits that you are using. The lower your utilization, the better. If you are using a high percentage of your available credits, then this may indicate that you are overextended and lenders will perceive you as a person that is at a higher risk of defaulting. So a higher utilization will hurt your credit score. So that's how the lenders see it. A higher credit utilization lowers your credit score. A lower credit utilization increases your credit score. So here's a general guideline of credit utilization. You are considered excellent if you're using 0% to 10% of your total available credits. Good is 11% to 30% utilization. Average is 31% to 60%. Below average 61% to 100%. So if you remember, this is why I said that I constantly request a higher credit limit on my credit cards because I want to boost my total available credit so that my utilization goes down, which is good for my credit score. Moving on to the third most influential factor in your credit score is your length of credit history, which makes up 15% of your credit score. This refers to how long you've had credits and the average age of your accounts. A longer credit history is good for your credit score because this shows that you have more experience using credit. Here are the primary factors for determining the length of your credit history. Age of your oldest account, age of your newest accounts, average age of all of your accounts. And here's a general guideline of the length of your credit history. Your history is considered excellent if you've established 25 years of history or more. 8 to 24 years is considered good. 3 to 7 years is average. 0 to 2 years is below average. So of course, if you're younger, you're going to be automatically dinged in this section for not having a longer history. But as time goes on, this section of your credit score will improve as you build your history. That's why it's so important to start building your credit history as soon as possible. So you saw my stats. I started building my credit at an early age and as quickly as possible. And I kept that credit card open this whole time, which is boosting my credit score. Another thing that I want to point out is that even though my oldest account is below 25 years old, I still have an excellent credit score. So 25 plus years, that's not necessary to have a great credit score. The next factor that will impact your credit score is your credit mix. Your credit score will take into consideration what types of credit accounts that you have, which include credit cards, mortgage loans, auto loans, installment loans, retail accounts, etc. Having a mix boosts your credit score. That's because it demonstrates your ability to successfully manage different types of credit. But honestly, don't worry about this. In order to be super prime, it is not necessary for you to have each one of these loan types. Therefore, do not go applying for different types of credits just to boost your credit score. Because remember that this only makes up 10% of your credit score and the cost benefit is just not worth it. Okay, so here for me, I do not have an auto loan. So I don't have all these categories, but still my credit score is just fine. So again, you don't need to check off all the boxes in order to have an excellent credit score. The last factor that impacts your credit score is new credits. So this is very important for you to understand because you will run into this situation multiple times in your life. When you apply for a loan, they will perform a hard inquiry and this will hurt your credit score. An inquiry is when your credit report or your credit score is requested and the credit bureaus keep track of these inquiries. If you have a lot of inquiries, then it's a bad look because it looks like you are struggling financially because you're frequently looking to borrow money from multiple sources. And it's very important that you understand this, especially if you're looking for a loan. If you have multiple hard inquiries in a short period of time, those multiple hard inquiries will count as a single inquiry. The time frame allowance is about two weeks. So here's my tip. If you're going to shop around for the best interest rates with hard inquiries, do it strategically in a short period of time. That way, all of those hard inquiries will count as a single inquiry. If you spread out the inquiries over a longer period of time, then you will have multiple hard inquiries on your credit reports and it's going to lower your credit score. So here's a general guideline of hard inquiries. If you have zero hard inquiries in the past two years, that is considered excellent. One to two is considered good. Three to five is average. Six or more is below average. And I want to give you this tip. When there's a moment in your life when you don't need a perfect credit score, that's going to be the best time to get an additional credit card. So I want to explain this. So let's say that you recently bought a home or moved into a new apartment or you just got an auto loan. When you do these activities, you will need to show your credit score. And having a high credit score, that's going to be very important to you at that time. But let's say that you do those things. And then in the near future, nobody's going to be checking your credit score for at least a year or two because you just got an auto loan. You moved into your new place and that is going to be the perfect time to get an additional credit card. That's because when you apply for a new credit card, they're going to run a hard inquiry on you. And that's going to lower your credit score, right? And if you get a new credit card, then the age of your newest account is going to be recent and that it's going to hurt your credit score as well. But honestly, in that situation, who cares? Because nobody's going to be looking at your credit score anytime soon. And then in the future, those factors will swing in your favor and it's going to boost your credit score. Because the hard inquiry, it's going to fall off your record. Your newest account, it's not going to be so new anymore. It's just going to get older. Your available credits will go up. Your utilization will go down. And those are all good for your credit score. So if you're going to apply for a credit card and your credit score is going to take damage in the short term, then the best time to do that is when nobody's going to be looking at your credit score. So when you saw my info, I showed you that I had two hard inquiries, right? Because I told you, I mean, I was just being honest, that I really wanted those two credit cards for the rewards. And right now, I do not plan on applying for new credits. So right now is a great time for my credit score to take a hit. It didn't seem like it took much of a hit, which I'm surprised by, but that works for me. So listen, you can fix your credit score fast. If I can do it, then you can do it too. My credit score was terrible. I don't know what I was thinking when I was younger, but I learned and I wanted to share this with you. Please subscribe. I thank you for the support and I wish you a very nice day. Take care.