How To Get A PERFECT Credit Score For $0
Published: 2022-03-21
Status:
Available
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Analyzed
Published: 2022-03-21
Status:
Available
|
Analyzed
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Topic
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The strategies presented in this video for improving a credit score are estimated to be worth at least a few thousand dollars to the viewer.
"I guarantee this information could be worth easily a few thousand at minimum if you just follow along."
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A missed payment on a credit account will remain on a credit report for seven years and will have a significantly negative impact on the credit score.
"Because if you do, that stays on your report for 7 years and it has a pretty devastating impact."
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Credit scoring algorithms focus on the percentage of available credit used (utilization rate) rather than the absolute dollar amount owed.
"And when it comes to this, it's really important to clarify that it's not the dollar amount that the credit algorithms care about, but instead the percentage of the credit that you use."
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To positively impact credit score, begin building credit early and maintain open accounts for an extended duration.
"So my recommendation is to start building your credit as soon as possible, but also keeping those accounts open for as long as possible."
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While small collection amounts (under $100) may not appear on the latest FICO scores, it's still advisable to address them to maintain credit health.
"Typically collections under $100 do not show up on the latest FICO scoring method, but this is still something you're going to want to keep on top of, regardless of how much money it is."
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Buy Now Pay Later (BNPL) services are being reported on credit reports and can impact credit scores, suggesting that using them for large purchases might not be as beneficial as initially perceived.
"The popularity of the buy now pay later platforms are showing up on your report as well. So, if you thought it was an easy workound to buy that $3,500 Pelaton bike for $20 a month, you might want to reconsider."
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Becoming an authorized user on someone else's credit card can allow you to benefit from their established credit history, thereby improving your own score.
"This is when someone else with an extensive credit history adds you as an authorized user to their credit card and then all of a sudden their credit history shows up with your account. This is also what's known as credit piggybacking because you could get the benefits of someone else's score without doing all the work yourself."
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Some credit card issuers (Capital One, Discover, Wells Fargo, Bank of America) will report an authorized user's past credit history, while others will only start reporting from the date of authorization.
"As of right now, it appears as though Capital 1, Discover, Wells Fargo, and Bank of America will report past credit history, and other credit cards will only begin showing history at the time that you become an authorized user, which at that point is essentially like you just getting another credit card except in someone else's name."
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When becoming an authorized user, it is crucial that the primary cardholder has a strong credit history with no late payments and at least 3-5 years of experience.
"You really need to make sure the person who's adding you as an authorized user has at least 3 to 5 years of credit experience, no late payments, and everything in good standing."
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Reducing credit utilization to under 10% is identified as the most impactful strategy for quickly improving a credit score, given its 30% weighting.
"I would say for most people, this is going to have the biggest impact to your score in the shortest amount of time possible. Just remember the amount you owe, known as your utilization rate, makes up 30% of your score."
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A higher credit score resulting from paying down balances is typically reflected on credit reports within 14 to 30 days.
"And once this happens, a higher score is usually reflected in 14 to 30 days."
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Opening new credit lines to increase available credit can lower the credit utilization rate, even if spending remains the same, thus improving the credit score.
"Meaning, if you have $5,000 of available credit and you spend all of it, that's a 100% utilization, and that's bad. But if you open up a new credit line and now you have $10,000 of available credit while you spend the same $5,000, that's a 50% utilization rate, which is not as good, but it's not horrible."
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Experian Boost is a free service that can improve credit scores by incorporating on-time utility and phone payments into your Experian credit file.
"Experian Boost would aim to fix that, and most of you would be able to qualify. Now, none of this is sponsored, but Experian Boost is a completely free opt-in service that links your accounts and then tracks on-time phone and utility payments by adding them as a positive trade line on your Experian credit file."
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Utilizing Experian Boost can increase positive credit history and add records of on-time payments to a credit report.
"Doing this will give you more positive credit history and will add on-time payments back to your report."
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The severity of a late payment's impact on a credit score increases with the duration of the delinquency, with 90-day late payments being worse than 60-day or 30-day ones.
"If you have any kind of late payment, just be aware that it only gets worse the more time goes on. For example, a 90-day late payment is going to be significantly worse than a 60-day payment versus a 30-day payment, and so on."
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It may be possible to have a late payment removed from a credit report by politely requesting it from the lender as a courtesy.
"You could always try calling them up to see if they'll remove it as a courtesy. Now, to be clear, they're not obligated to do this at all, but you know the saying, you could catch more flies with honey than with vinegar. And asking really, really nicely can sometimes go a long way."
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Disputing inaccuracies on a credit report can lead to their removal if the reporting agency cannot provide evidence to the contrary.
"If you see anything out of place and they can't prove otherwise, they'll be forced to remove it from your report."
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Closing old credit accounts can negatively impact the average age of credit history, which is a factor in credit score calculation.
"Because your credit score is calculated by the average age of your account history, that often starts from the age of your very first account. But if you close that oldest account because you don't use it anymore, what you're really doing is erasing your oldest trade line. And when that happens, eventually the average age of your account history is going to drop."
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To maintain the age of credit accounts without incurring fees, it's recommended to make small, infrequent purchases on no-annual-fee cards to keep them active.
"The rule of thumb here is that if they have no annual fee, just charge an occasional $1 Amazon gift card to the card every 6 months or so, and then just keep it active for as long as possible."
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If a credit card has an annual fee, downgrading to a no-fee option is advised to preserve account history without incurring ongoing costs.
"If the card does have an annual fee, consider downgrading the card to a free option, so that way you keep your account history without having to pay for it."
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Paid credit repair services are often scams, and users should be wary of online claims of score increases.
"Do not pay for any credit repair services and ignore all the spam comments praising someone for increasing their credit score. Most of those are scams..."
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Achieving a perfect credit score is possible for free by implementing simple steps within an hour.
"All of this is something that you could do yourself for free in under an hour and everything is extremely simple to learn. If you're able to utilize these six steps, a perfect credit score is absolutely achievable for totally free..."
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A credit score of 760 or higher generally secures the best loan terms and services, with minimal additional benefit from scores between 780 and 800.
"anything above a 760 will usually get you the best rates, terms, and the full red carpet service. So, there's really not a lot of difference from a 780 to an 800 from their perspective."
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