The 10 Biggest Credit Score Mistakes (And How To Avoid Them)

all right what’s going on everybody so
in today’s video I’m gonna be going over ten different credit score mistakes so
if you learn from these mistakes your credit score will improve the thing
about credit scores and credit in general it’s not the most complicated
thing in the world there are proven strategies that people have used over
and over again to improve their credit score so in this video I’m going to go
over ten different mistakes that I see a lot of people making and if you learn
from these mistakes your credit score will improve I can guarantee you of that
so mistake number one is that I see a lot of people only using credit cards to
build their credit score so while you can’t build your credit score using only
credit cards it’s just not the most strategic thing to do and the people
that have perfect credit scores or very very high credit scores they have a
mixture of credit so you want to have credit cards you can have a car loan you
can have a property loan you should have a wide mixture of things and that’s not
to say just to go into debt with all these different things but instead of
paying cash even if you can’t pay cash it’s also important to build your credit
so maybe you pay a little bit of interest and you paid off each month but
getting a loan on your car is probably a smart thing to do getting a real estate
loan is probably a smart thing to do there’s tax advantages to that so you
should utilize a mixture of credit that’s gonna help your score okay so
mistake number two that I see a lot of people make and this is probably the
most common mistake that people make with their credit score is that they
will close out a credit account so let’s say they got a Macy’s credit card you
know ten fifteen years ago and they didn’t know any better and they finally
paid it off and now they just want to completely close it up that’s actually
gonna hurt your credit score and the reason being is that part of your credit
score is your credit history and the other part is credit utilization ratio
how much credit you’re actually using versus how much you have so let’s say
you have your little Macy’s credit card and it has a two thousand dollar limit
if you close that out and you’ve been making payments on it that’s gonna erase
your credit history for that card and it’s also going to hurt your credit
utilization ratio you’re gonna have less credit to spend so those are two
negative factors that you don’t want to do so even if you bought or got a pretty
bad credit card back in the day you know don’t close them out just use it for
like a utility bill use it for some every single month and maybe you can
even ask for an increase in that card to increase your credit utilization ratio
so overall just never close out any type of credit account try to keep it open
just put in a nominal amount on there it’s gonna help your credit score
overall okay credit mistake number three it’s keeping too high of a balance on
your credit cards and credit accounts so ideally you want to keep it under 30
percent that’s gonna be how you build your credit and how you improve your
score if you’re over thirty percent if you’re out like 50 60 80 90 percent if
you’re maxed out of your credit that is going to negatively affect your score
and it’s understandable if you’re if you’re just forced in that situation and
you have to do that but as soon as you can should pay off those credit accounts
pay down your credit card it’s going to help you build your score and eventually
lead to a bigger increase in your line of credit okay mistake number four that
I see a lot of people make is that they don’t check their credit score regularly
enough so you should be checking your score at least once a month with your
credit card as well as any type of online banking that you might have
there’s going to be options to check your credit score once a month and
there’s going to be different bureaus reporting so you should check if you
have a different credit card account and different bank account you should check
all of them just to make sure that they’re kind of on track with each other
because there’s gonna be slight variations typically but you don’t want
to just check it every six months huh because a lot can happen in six months I
mean even months a month you can see some pretty drastic changes if you pay
off a loan or if you have a missed payment or if you rack up a lot of debt
your score is going to change pretty drastically so you should monitor that
as much as you can okay mistake number five is missing a payment or having a
late payment so this can really dig your score if you’re having history of like
late payments and miss payments and things like that so what you want to do
as soon as possible is set up auto payment we’re just drafts for your bank
account that’s gonna be the easiest way to solve that issue because you don’t
want to like let’s say you’re applying for a mortgage or rent or whatever it is
and they see a history of late payments they see a history of missed payments
it’s not gonna look good that’s gonna hurt your score so try to set it up on
auto pay and what I typically like to do I’ll set something up on auto pay and
then I’ll typically call and confirm that it’s on auto pay because every now
then someone might mess up it up there might be an error on your side so always
set it up on auto pay but then also could
with the company or the lender that you’re working with okay mistake number
six is cosign for loves so this is a very dangerous territory if you’re
co-signing for a loan just be careful I mean I see a lot of parents my cosign
further kids is to get them started with credit and I think in that situation it
might be okay but if your co-sign for like some new business startup that your
friend is doing or co-signing for something else you really have to be
careful if you really want to protect your credit score just don’t cosign for
anything because once you cosign you’re giving up your credit score essentially
to some other person that may or may not fulfill their obligations so you’re
giving up control so I would try to keep it as in-house as possible when it comes
to your credit score okay number seven is not fixing mistakes in your credit
score so believe it or not there are going to be errors in your credit score
there’s going to be mistakes companies are gonna bill you for things that they
shouldn’t have billed you for or doc you for late payments that weren’t actually
late payments so you need to regularly review your credit score and also review
your bank statements and credit card statements and things like that
just to make sure there’s no errors and when you do see an error you should
submit the error online through the three credit bureaus or you can mail in
the air there’s a specific way to do that if you look online up to three
credit bureaus information on how to mail in different errors they can help
you with that but make sure you go after any errors and the loophole here is that
the burden of proof is on the credit reporting agencies to actually find out
that you miss a payment or relate on a payment and these are very bureaucratic
organizations that’s very difficult for them to do even if you did miss a
payment or even if you are late on the payment it’s very hard for them to
actually verify that in the timeframe specified so that’s how these credit
repair companies like make so much money and can improve your credit so quickly a
lot of times is that they’ll submit a list of errors but maybe even a list of
things that were actually having maybe you were late on the payment but because
these credit companies are so bureaucratic and everything like that
they can’t prove that you missed the payment so your credit score can
actually get significantly higher by disputing these different errors or
so-called errors and your credit report so if you see anything fishy you know
definitely try to make a claim disputed and try to get it fixed in your
credit report okay mistake number eight that I see a lot of people made is
opening up credit cards with department stores and I touched on this briefly
earlier but just don’t do that it’s not a good idea
they statistically and pretty much categorically have the worst rates the
worst benefits it’s just not a good idea there’s much better credit cards you can
have if you do a little bit of research online you can find significantly better
credit cards and I’m not gonna go into a specific credit cards and everything
like that right now but two companies that I would highly recommend and they
have different credit cards with each company but American Express is great I
would look at American Express credit cards I would also look at chase chase
an American Express and I’ve had lots of credit cards I have a lot of experience
with credit I’ve over $100,000 in credit those have been my best experiences so I
recommend looking into those type of credit cards okay mistake number nine
that most people already been aware of is not asking for increases in their
credit lines so if you’ve been with a credit card company or a credit account
for a year or two years even six months you should ask for a credit line
increase there’s typically not going to be some like interrogation period
they’re just gonna say okay how much do you want
and then you typically I would recommend asking for a significantly more than you
actually want and then they give you somewhere in the middle so if you have a
credit card and has $1,000 on it ask for a $5,000 credit limit and then once they
approve you for 5,000 then ask for a 20,000 limit and keep going and keep
expanding your credit lines most people you know five ten years into their
credit card and credit score experiences they might only have like 5,000 and
credit you should try to build your credit and build your credit lines as
much as possible because I think if it is like an insurance plan you want to
build your credit lines out when you don’t really need them because if you’re
an entrepreneur if you’re in business and eventually you will need them it’s
going to help you get through like the down months and things like that so try
to pay down as much as possible you shouldn’t just use your new increased
credit line to like buy a Maserati or get a Maserati lease or anything like
that but you should periodically maybe every six months ask for credit line
increases with all your credit accounts and I would add that if you have let’s
say like three credit accounts you don’t want to just do it all three at the same
time because that’s gonna you know negatively affect your credit if you’re
requesting credit line increases they’re going to do a hard check on your credit
typically so you know a hard check on your credits not the end of the world is
continue a few points which in the grand scheme of things is not that big of a
deal but try to space out your credit line increases maybe do it every three
months every six months just don’t do like three or four credit line increases
all at the same time okay mistake number ten is just avoiding credit all together
so a lot of people think oh you know what I’m just gonna pay for everything
in cash I don’t need credit I don’t want to rack
up a bunch of debt I don’t want to keep up with the Joneses that type of thing
however credit can be used very strategically and just because you get
like a ten thousand dollar line of credit doesn’t mean you need to use it
in fact you should get a ten thousand dollar line and then try to get a
hundred thousand dollar line it’s gonna help you there’s no downside to building
up your credit you can use credit pretty conservatively and pretty strategically
just because you have a ten thousand dollar line of credit doesn’t mean you
need to spend ten thousand dollars a month you can just pay a utility you’ll
pay a fifty dollar bill on that credit account just to keep it active and keep
it card and keep it going and keep your score increasing the people that have
the best scores oftentimes have really long lines of credit and oftentimes have
a mixture of credit the people with perfect credit scores are never alike
the people understand like one credit card and just avoid credit at all costs
so you need to build your credit and use a mixture of lines and definitely do not
avoid credit okay so thanks for watching this video on credit score mistakes and
if you have any questions about your credit score drop them in the comment
section below and please like please share please subscribe and I’ll see you
in the next video alright bye

4 comments on “The 10 Biggest Credit Score Mistakes (And How To Avoid Them)”

  1. Matt Leighton says:

    I've definitely made a few of these mistakes!

  2. Nick Cuttonaro says:

    INCREDIBLE video, Jeff! There are mistakes to be made, its all a part of the learning process! I just uploaded a video on DIY credit repair, to help when mistakes are made! Check it out! Congrats on your channel!!

  3. Jay P says:

    Great video Jeff. Also the advantage of checking your credit score regularly is to make sure your identity didn't get stolen. Aside from that, does your cash to debt play a huge part in your credit score? I'm assuming it does, but just thinking in terms if your debt stays the same but you get a decent cash windfall.

  4. Jeff Leighton says:

    ►►► The Credit Score Blueprint on Amazon NOW:

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