Credit Score Awareness
Bucket List - 800 Credit Score
Achieved early 2019
Achieved early 2019
Credit Score 101 Video
You can also read the content below.
Intro to Credit Score & Levels
The 3 Major Credit Bureaus
When a Loaner or Utility wants to "Run" or "Look" at your credit score, they will either use a generated list combining two or all bureaus..
Or check one individually. This is what is referred to as a soft/hard Credit Inquiry.
2 of 3 Credit Bureau's
1 of 3 Credit Bureau's
3 of 3 Credit Bureau's
Free Credit Helper
Can be found in any App Store and at CreditKarma.com
Good for tracking anything that pertains to your credit. Full list of open Credit Cards, loans and detailed lists of on-time payments, Collections Status if any etc.. , Estimating your overall score (not exact).. all for Free! File your taxes for free too! (Have used it personally for the tax year of 2020)
Why don't people talk about credit?
Picture from my Credit Karma on 5/16/2021
A lot of important topics are not openly discussed, credit is one of those topics and very important.. yet most treat it like a "secret society". This is often due to people being programmed that sharing your score is the same as sharing your social security number. That is wrong. You may become a target for I.D. Theft by sharing your score, true.. but they need your social for that and if they don't have it then they cant commit fraud on you. They also may be wanting to hide their score because its probably low. Imagine getting married to someone who said they were debt free and when you get married, find out they have $100,000 in debt and are not making payments and has been growing in a collections account. This is going to be very bad for you, since they lied about their credit and have now become your spouse (Combining your finances).
Anyways, what I'm trying to get at is.. most people that don't want to share their credit score is probably because they want to hide something about their credit history or they are just a private person and you should get to know them more if its a relationship. I would personally ask to see their credit score before getting married, that's just me though. Usually among friends, everyone is open to sharing scores. Since your friends, nobody is going to try and steal your social. It is very rare and if someone does commit fraud, using your social.. there are ways to fight it and that's called Disputing. More on that later..
I don't care about all the politics and social taboos of this society.. We learn in this world by sharing, not withholding information. I will not partake in this societies information withholding nonsense and keep it from those less fortunate. The reason we have so many less fortunate, is due to the withholding of information in our societies leadership. It's ran by criminal politicians who are in bed with criminal CEO's and their companies. We will have to work together to get helpful information out to those less fortunate, such as what I'm trying to do with this website & YouTube channel.. as well as other private citizens creating their own companies to help others. Our society is so restricted in information, people will go through 1-2 decades of school and still not know anything about living here.. It's up to us to spread this knowledge to each other and/or pass it down to our children. As most people who know about credit, usually learn from their parents/family or good family friend's/strangers. I learned by going out in the world on my own and experiencing it myself. Watching it go up and down as my credit history and debt went up and down, so does your score.
I'll show you my credit score as of today and tell you how I got there, all the while not becoming wealthy either. In which case, it means you do not have to be wealthy to have a high credit score. Just paying your monthly minimums or bills on-time, until they are paid off will inevitably increase your credit score and positively create credit history.
We are in this together and you can use my road to 800 as a tool to help guide you as well.
Credit Index
Info taken from CreditKarma.com & My Personal Experience
Credit is basically a debt re-payment system tracker.
The more you pay off and the more accounts opened (or credit history) with on-time payments, your ensured a high credit score rating.
Most make it sound complicated, but its really not at all.
You get a good score(High) by paying your minimum payment, making a larger payment, or bad (Low) score by not making a payment at all or being late.
It's really that simple..
It is recommended and HIGHLY suggested to NEVER give out your social security to anyone. Especially over the phone or E-mail its highly suspicious,
always research the company and verify their legit.
You can do this by going to a companies website directly and if your doing business with them, call them directly or go to their nearest physical location.
This index is all you really need to keep in mind as we learn about credit:
Credit Cards - A credit card is an amount assigned to a card, based on your yearly salary upon applying. You can use this card to buy things, up to the limit on the card. People often begin their credit score history with a Secured Credit Card $200 to $300 and then work their way up to a normal Credit Card based on salary.
Balance Transfers - A credit card balance, lets say $1000 is still on your card and the zero interest period is about to end. Interest rate is commonly around 18-20% and adds up to a lot of money.. which is why everyone is scared of credit cards. Well, if you take advantage of balance transfers, or moving that balance onto a new card.. problem solved! You can open a new card, SOLELY for that $1000 to transfer onto it. You will then be given a new zero interest rate period on that new card. Be smart though and DO NOT start making purchases on this card. Use this card ONLY to hold that previous balance, while still not having to pay any interest. That is a balance transfer, simply transferring an old card's remaining balance to a new card. This is good and bad, due to the possible credit inquiry for the new card.. however your also removing or paying off the total balance on the old card entirely. After the balance moves to the new card, do not touch your old card except for maybe a monthly bill for example or you plan to pay it in full each month.
Credit Card Utilization - Lets say I have 2 cards, both have $5,000 Credit Limit on them. I have a combined credit limit of $10,000. The amount of credit left is actually the Utilization. For example, paying your cards off in full every month. Paying them in full every month will keep your utilization at 0%. In turn, keeping $2,500 unpaid on both; adds up to $5,000. Since $5,000 is half your combined credit limit ($10,000) between all cards, your credit utilization is now at 50%. If both cards were maxed out, you'd be at 100%.
Loans ( Auto, School, Home, Business, Personal ) - Anytime we want to purchase something very expensive or worth a LOT of money, since we are all not millionaires.. we have to take out what is called a loan. Or rather, we can pay it off over time instead of one big purchase. This also comes with an interest rate, just like credit cards. However, the amount for loans is usually much higher and will be a much lower interest rate than a credit card. For example my 17 Prius loan was 0% interest with my credit history. But someone with a lower credit history may have gotten 2% interest on their 17 Prius. Also depends on how you negotiate the deal.. Let's just round off loans between 0-8% interest in general.
Collections - Collections are balances that have accumulated or left over and not paid for. This can be that you chose not to pay it, forgot to pay, or simply can also be a mistake/ fraudulent charge in your name. If you chose not to pay it or forgot to pay it, you might have earned this collections notice since you may have received a service or product for that payment. However, I know many companies can have shady practice and you may not want to pay them. Simply fight with them to waive the fee, otherwise you will have to pay this and its better to pay the original amount.. because in a collections notice, the balance will grow on a monthly basis. If you find a collections notice from a bill you have no recollection of, its good to investigate first and see if you forgot about it. If after your investigation comes back and you know that its not yours, you can file with all 3 credit bureaus that this is not yours. It may take a few weeks to a month or two to dispute something on your credit history, but just provide the information and dispute it patiently. They will see that its not yours and it will most likely be removed from your record.
On-time Payments - Each type of loan or credit card will have a monthly payment date, paying on-time will keep your account in good standing. Even if just the minimum was paid, you made a payment and that's what counts. Note that making a payment before your due date will count as payment for the month. This means you can make a payment anytime you want, as long as before the due date. Afterwards you become a delinquent or over-due and will reflect negatively on your credit.
Soft/Hard Credit Inquiries - Each time we need to start a certain service or apply for a loan, or a credit card.. this company or loan provider will check our credit score and/or history. This is called a credit check or inquiry. General rule is to not have more than 3 Inquiries in a 2 year timeframe, more than 3 will start effecting your score negatively. This is so you don't go having a million companies pulling your credit and does require some research into your investment beforehand. The reason it may require some research at first is to make sure you really want or eligible for what your applying for.
Credit History - Let's say you got your first credit card and only that one in 2020. Nothing else is on your record except this credit card. Now in 2021, you should have made 12 payments ( 1 per month ) on that card. Those 12 payments are now your first year of credit history. Whether they are on time payments or late payments, companies will now see it.
Age of Credit - Keeping the example above, you've made 12 payments. You only have 12 payments on your credit record. Each payment represents 1 month, naturally that makes your credit age at 1 year old.
Derogatory Remarks - Let's say you declare bankruptcy. Bankruptcy is when you are unable to pay your debt any further and ask for relief. Well, it now has to go on your credit record that you have filed for Bankruptcy. You took out a loan and was unable to pay it, your responsibility has now turned to poop in terms of reliability. Granted it may or may not have been your fault entirely.. it will reflect negatively on your record.
Fraudulent/I.D. Theft - It's good to keep an eye on your credit score with Credit Karma, because they are consistent with updating your full account list and actual balances. If you become a victim of I.D. Theft, someone can open a loan or make purchases under your record, in which case you did not authorize and is Fraud. It is your responsibility to report this to all credit agencies, you can even do so on Credit Karma for some of them. I would make sure to create an account on all credit agencies to fully make sure that you have disputed the fraudulent remarks or purchases. Give it some time, this is going to be investigated and once it clears.. good job! you have successfully fought to keep your own record clean. If they are purchases on your credit card, simply report it to your credit card company. Let's say your credit card was stolen, its wise to call your credit card company to deactivate the card and any purchases that were made immediately after being stolen. They should then deactivate that stolen card, decline the purchases that were made by the thief and send you a new card. Remember, stay proactive and don't stress. Solve the problem and it will get fixed, it may take some time and be an annoyance by adding more to do.. but really this is life. We live among criminals, be prepared to defend your record if one happens to target you.
Dispute - When someone who you did not give permission to use your Social Security # or stole your identity makes purchases in your name. This is related Fraud/I.D. Theft. You are allowed to file a dispute with all 3 Credit Bureau's. You can even dispute some directly on Credit Karma, all but Experian if I'm not mistaken. What will happen is opening of a disputing case begins. It may take a few weeks to months in order to be resolved, be patient. Once it is won in your favor, they will remove whatever it was that is not suppose to be on your credit history. It is unfortunately unpredictable what a dishonest spouse may do to damage your credit history. That is another risk of marriage :) .. I'm not scared of marriage because of this, but you'll eventually meet someone who had to pay off all the debt of their spouse. Just be careful out there. Remember, see some activity that is not yours? Dispute it right away.
It is recommended and HIGHLY suggested to NEVER give out your social security to anyone. Especially over the phone or E-mail its highly suspicious,
always verify the company and th legit.
You can do this by going to a companies website directly and if your doing business with them, call them directly or go to their nearest physical location.
How to start Credit?
There are two ways to start your credit or credit history is what I like to call it..
1. Secured Credit Card
Choose a Bank or Credit Union and have a deposit of usually $200.00 ready. The credit limit will either be that deposit amount or a little higher (Amount you can spend up to). Remember, this is so you can build some credit history and be less of a risk factor to companies. Make your monthly payments on this and prove you are responsible. You can get a real credit card later, with a much higher amount. (That doesn't mean you are going to get a bigger credit card and max it out either. Remember.. be responsible.)
A free article on secured credit cards can be found here from Experian (A Major credit company)
2. Co-Signer of Purchase (Starting some kind of loan)
Ask a family member (many parents do this for their children) or VERY GOOD and HONEST friend that you know has good credit established.. if they will be a Co-Signer. Keep in mind they will have to trust you as well, because if you fail to make payments.. They will go after your Co-Signer for payments. In doing this, you are legally both responsible for whatever you are Co-Signing for. Hopefully YOU are doing your part and making your payments, not breaking your part of the deal and forcing a bad record onto the co-signer and making them also responsible for payments because you choose to be irresponsible. Please, help yourself and your Co-Signer and make your monthly payments.
Making your payments, ultimately helps provide positive credit history to both you and your co-signer. Don't be one of those who stops making payments, its not only hurting you.. but your Co-Signer as well.
Some examples of using a Co-Signer:
Big Purchases, Loans, Rental Agreements.
Vehicles (New/Used Car, Motorcycle ect)
Credit Cards (I have never done this, but it is said you can get a Co-Signer for these)
Personal/Auto Loan (From a Bank or Credit Union)
Mortgage (Home loan or property ownership loan)
Apartment (Not living inside the apartment with you, but also liable for the monthly rent terms)
Credit Roadmap
For me, credit is basically a tier system or level up system with a higher and higher amount allotted.
I've created a roadmap or text visualization out of this.. This is what sets your credit worthiness, as they call it.
Your credit roadmap is generally going to look like this, if starting from the bottom like me.
The bottom, as in "no income" and then starting work with low income.
The Roadmap: Credit History Beginning to Present (My personal experience)
1 : Secured Credit Card (1 of these)
2 : Regular Credit Cards/Balance Transfers (17 of them)
3 : Loans (5 of them)
4 : Mortgage (To Be Determined)
5 : Business Loan (To Be Determined)
(1) Secured Credit Card: My beginning. I opened a $200 deposit, Secured Credit Card with Bank of America in 2013. I would recommend using your Local Credit Union. In Los Angeles, Wescom is a good local credit union that has surrounding locations. Feel free to search your city for use of a more local credit union, if Wescom is not convenient for you. Otherwise, a major bank is also widely available as a last resort.
Link to find the nearest Wescom
(2) Regular Credit Cards: I had no real job and living with my parents rent-free. However, that does not mean they also gave me money to spend. I had to provide for myself in furthering education and expenses outside of the no rent agreement with them. Regular Credit Cards were my choice, as they have interest-free periods upon creation (12-18 months, be sure to check yours). I also got the ones with spending bonus's, such as spend $1000 and get a free $200 credit for example. This credit can also be used as a payment toward your credit card, which is what I refer to as a "free discount" on a big purchase or living expenses on a credit card, by a credit card company. For example, my Phlebotomy Program was over $3000 in a private trade school. I got two new credit card offers with spending amount bonus's like I mentioned. It was $150 and $200 on the other I think, giving me a total of $350 free money or free discount on my trade school. After the discount, next comes the free loan, due to providing ZERO interest for a year or longer.. when starting a new credit card. I don't have a job still, so I am just making minimum payments this whole time. When the zero interest rate period ended, I just balance transferred what was remaining. By then I had a job to pay off the next card which I had balance transferred. I later went on to do this with furniture for my first apartment and that would explain why I have accumulated 17 credit cards.. between the 1 secured card, to free money cards, balance transfer cards, to a cash back card at Costco. I have made it my financial purpose to pay them all off over time and never paying a cent of interest. Unfortunately, In ALL of my history of the 17 cards.. I failed to make a balance transfer 1 month too late and it ran out of the introductory zero interest period. It was just one time though and I don't see it as a big deal, I was still paid more by credit card companies and never had an interest payment besides that. Just be disciplined and know your spending limit, when to stop and when to balance transfer if your still trying to pay something off. Stop using cards if you have no more purchases you want on credit cards, just stop using them. Put monthly bills on them to keep them active, otherwise they may be closed after some time and you will lose that credit history. If you don't have enough monthly bills, just make 1 purchase on the card for the year or every 6 months and that will keep it active. Remember, you need to be in control of your credit cards, do NOT let them take control of you and your good!
I'm at a point now, where I have everything I wanted, besides investing into this business, starting on my own is accomplished. I don't need credit cards anymore besides keeping them active at this point. I don't use them besides monthly bills and my Costco Card which gets paid in full each month. I know I have 17 cards, but I've let 6 get deactivated and don't really care about the ones that are still active, I just keep them active.. that's all. I don't think of spending stuff on them or anything. I live by how much my salary lets me live and just get the cash back on my Costco card now. I may buy a laptop for this business, so I can work while I travel.. that would warrant me to open another card and get more free money after spending a certain amount. I would then be at 18 cards haha! But yeah, I've kept it in control and not let credit cards control me. Be strong, you can do it to if you decide to use credit cards how I did.
(3) Loans: 5 Loans Total. 3 Auto Financial Centers, 1 Family/Personal, 1 Federal (Government) Student Loan.
NOTE: My first car was actually a 1994 Saturn SL2, paid $1500.00 cash to family member. This is not on my credit history, due to paying cash.. thus not a loan and not added to this list.
1 - Federal Student Loan under FAFSA (Federal Student Aid) started with a $15,000 tuition fee for Massage Therapy at Everest Colleges. Just before my program was to be completed 7-8 months in, they had closed down. Doing self research on how to rid the now huge responsibility of $15,000.. I worked with Nelnet (Student Loan financial center) and found out this qualifies me for loan discharge. After sending mail back and forth for maybe half a year, sending proof and correctly filing documents to mail again and again if not correct.. I eventually received my last mail from them, stating that the loan has been discharged and I was no longer responsible to pay it. My first payment was even refunded, I was free from this debt.
(It is unknown if this affects my credit score, as it does not show on my credit history. By the fact it is not on my credit history, let us assume it does not affect my credit score at all)
2 - Starting my first auto loan in 2015 with a Honda Civic ($20,000 Value), which was a lease (lower payments ($205 Monthly) and before getting a Phlebotomy job. I had totaled the car shortly after, be mindful due to MUCH higher insurance rate for the next 3 years. I could not get a new car for at least 2 years, I had went back to using a family car.
(Total loan was 3 years standard lease agreement with 36k miles, ending at 5 months in due to accident. Honda Loan Account was paid by insurance and closed, confirmed on credit score)
3 -Wanting to get my own car again and after finishing phlebotomy school, I got a family member to loan me $5200 for a 2005 Infiniti FX35. I had a job in phlebotomy by now and paid it off after half a year I believe.. It had been two years at this point and I had taken the Infiniti to a shop for a complete tune-up. I paid around $2000 for new tires and checking all the insides. Little did I know they broke the car during the tune-up and it had started giving me problems. Now before I continue, you should know that you have the right to demand the mechanic fix your car if they break it. I was unaware and thought I had to fix it, not knowing that information and my rights.. I was scared of the next breakdown. Family loan was written by myself and signed off after paid in full by my family member. No impact to credit score, just added to personal records as not held officially by a bank or financial center. Due keep in mind this is risky if you do not trust your family member or person giving you the loan like this on the side. They may alter your agreement and take advantage of you and you won't be able to do anything about it. I would suggest to go with them to a bank or financial center to get a legit loan document started with them. I trusted my family member and thus knew I had nothing to worry about and no agreement would be altered.
(I paid them back and heard nothing of it again. Loan term was anything, around $1000 a month. Paid loan in full at 6 months, keep in mind I had no rent still)
4 - I took a huge loss on the $7200 I put in this Infiniti and traded it in to Toyota not even getting half my investment as a down payment for a new 2017 Prius ($25,000 Value). This time financing the car (Higher payment $395 Monthly) and ultimately bringing the payment up substantially. However, a new car comes with years of maintenance-free worry as I was looking for such. It also was a Prius, the best hybrid out there with 500 miles on a full tank. Coming from that SUV with premium gas and only getting 200 miles on a full, twice a big tank size. The Prius was ultimately a huge gas savings, less time at gas stations filling up, worry-free maintenance wise and the only downside is high monthly payments. I was okay with that tradeoff.
(Total loan was financed over 5 years, paid off by Hyundai in year 3 with 2 years remaining. Credit Score showed Toyota loan account paid off and closed thereafter)
5 - Fast forward to 2021 now with a Sonata Hybrid Blue ($29,000 Value) and you can see over the years how my value is going up. Let's explain why I got a new car 3 years later, with over $10,000 still left on the car to be paid. I had a bad accident (not at fault) in which the insurance and lawyer involved sat on the car for the first 4 months. This ended up delaying the full repair of the Prius and ended up not even fully repairing it. I was stuck with another car that lost its "new" factor and reliability. I had to fire the lawyer and hire a new one, see what I could do to get the Prius fully repaired. It was drivable and no mechanical issues were noticeable. However, cosmetics were not correct as they did not use OEM parts for the repair cause cheap insurance company. I wanted to fire the insurance company too, but you cant fire them hahaha. I ended up creating this awesome deal for myself at Hyundai in one night of car shopping. I had taken another loss in my auto investment, however I would be ridding myself of further payments on the Prius. This was my tradeoff. Prius paid off, with some extra as a down payment. I asked for a $250 monthly payment with a lease and first they said no. I countered with an out of pocket $1000 down, to which they agreed. They took the Prius and I had only put down $1000, which was around a total of $2800 down payment with the extra value on the Prius. Now I have yet another NEW car for only $250 a month and free maintenance for the next 3 years (granted its just oil changes and alignments). In total, they paid off my Prius, gave me a new more expensive car, with lower payments. I was okay with this and okay with the initial loss of investment in the Prius. Next time though, I'd suggest asking for more value on a newer car, the Prius was only 3 years old and they still sell with accident records. This is where I am at currently, enjoying more power a lot more. I do hate the buttons though haha, I REALLY miss having a shift knob of some kind damnit. I think I'll get a manual transmission next, I really miss that hahaha!
(Hyundai Loan is current, standard 3 year lease terms with 36k miles)
(4) Mortgage - TBD, no experience yet.
(5) Business Loan - TBD, no experience yet.
Total Credit History Summary
Okay! After following me and my own credit roadmap, you have officially become aware of what credit history is.
Lets sum up everything..
Timespan this all took place: 7 years total (Averaged will be 3-4 years)
From the time I made my first payment on the Secured Credit Card, to the Present.
Credit History List: 17 Credit Cards
All Credit Cards are Paid Off and Current Good Standing, 3 Auto Loans (2 Paid Off, 1 Current), 1 Student loan through FAFSA (Null, filed by self due to school Closure) I don't see the Student loan on my credit score at all, credit score affected by this is null.
Collections: $xx.xx
Unfortunately, Wrongful Reports happen and it's our job to report the error to all credit agencies. Luckily I have not encountered fraud by I.D. Theft, but I do have a legal litigation pending.. in which case a payment for a healthcare bill was filed incorrectly under me personally, instead of under litigation for my auto accident. This has been reported to credit agencies for removal from my record. If they refuse to remove it, I'm forced to wait once the case settles and payment is given to all healthcare bills. Pending removal upon litigation settlement.
Home loans: No history
Other Loans: No History
Late Payments: No History
Derogatory remarks: No History
No bankruptcies, no ongoing missed payments etc..
Total On-time Payments: 391
100% from 2013 to 8/23/2021 Present.
Note: 1 payment is 1 month, thus meaning 391 months of on-time payments. Highly, Positively impacts Credit Score.
Current Credit Score: 720
Note: This is with wrongful collections mark, otherwise it was a High 780-800 without.. shows how much a collections mark lowers your score.
This is the last score seen when I took a credit inquiry by Hyundai for the new sonata hybrid. I believe this to be highly affected by 7 years of on-time payments. No late payments, no bad record of my own doing. At 800 before wrongful reporting of healthcare payment going on my record instead of the legal litigation.
Current Credit Score on Credit Karma with no Collections mark: 809 (no negative marks with my current history)
As pictured above, this seems to always be a tad higher than actual score, as it is a free to use estimator. It gives us hope hehe.
Conclusion
Let's go over what I have learned, in order to help you on your own Credit Score journey.
Credit score seems to be highly formed by the mixture of the categories below:
On-time payments
Length of time and how many of your accounts are open
No derogatory remarks
Minimum inquiries on places checking your credit score
Low credit card utilization
No active collections
Now that we know this, I wish you the best in your credit score journey and don't give up. It takes years to build and I have heard from many many many people in their misfortune on getting debt caused by other people in their lives. Try to be smart, learn from others, situations and so forth in order to protect your own record. Pay your bills on-time and watch your score go up. There is really nothing more to it, give it time and watch it go up.
If you are having trouble paying your bills, consider looking into working towards a higher paying job or lower your expenses.
A simple example is going to school or trade school or applying to a leadership role at your current job. This will increase your yearly finances.
Lowering your expenses by making your own food everyday, instead of buying $20.00+ on food per day. Grocery shopping for fresh ingredients can be $40 for the week and turned into meal prep, thus saving you a lot of money just on food alone. Yes, wealthier people don't need to worry about food expenses.. but if your starting from the bottom like I did. We need all the savings we can find.
Be sure to check more pages on this website for other helpful tips in life.
Good luck to us all and lastly, my personal next move is my own property or mortgage. Let's get it!