Credit Boost Miniseries

Let's start with why personal credit is so important. You can think of your personal credit as your trust rating in the world of borrowing money, and that personal credit is looked at whether you're borrowing money on the personal side or even if you're borrowing money for your business. It depends on your financial history and encompasses such things as credit cards, loans, and other debts.

Maintaining a good credit score has many benefits. It increases your chances of getting approved for any type of funding, can bring you better rates, better terms, all of that's dependent upon having good personal credit.

You need to understand what factors make up your credit score and how much they're weighted. The first one is going to be the biggest. This is going to be your payment history. Your payment history accounts for 35% of your overall credit score. And in order to get your score up above 800 and stay there, you need to have 100% on-time payments. Your credit usage or utilization makes up 30% of your overall credit score.

And those with credit scores above 800 have anywhere from a 1% to 9% utilization rate on their revolving credit cards. The age of your accounts makes up 15% of your overall credit score. Ideally, to get above that 800 score, you want to have at least six years of credit history, but ideally 15 years or more. And that's not to say you can't have any newer cards, but the majority of your cards need to have that age and need to show that history.

The account mix accounts for 10% of your credit score. The ideal mix is going to be a combination of a mortgage, revolving accounts, which is credit cards, as well as installment accounts. And lastly, everyone's favorite, hard inquiries. Those are going to account for 10% of your overall score. In order to have an 800 plus credit score, you need to have two or less hard inquiries on there.

So always be sure whenever you apply for anything, you ask, is this going to be a hard or soft inquiry?

Today we're gonna talk about how important it is to keep up with your personal credit report and how to dispute any errors. You can think of your credit report like a snapshot of your financial history, and keeping an eye on it will help you identify any issues or any mistakes. A lot of people are gonna hate me for this one, but Credit Karma is not the best source for maintaining and watching your personal credit.

You'll wanna review and order credit reports that cover all three bureaus on a regular basis. I'll put a great resource here. If you do find that there are errors on your credit report, you're gonna wanna dispute it not only with the issuer of that report, so whatever agency issued that report, but with the creditor as well. And be sure when disputing any errors that you are sending copies of any documents. You're not gonna wanna send them the originals.

And if you are successful in disputing those errors, you're gonna wanna make sure that you request or pull a new credit report just to ensure that those have been fixed.

Managing your overall credit card utilization. The ideal number is to have it below 10%. When you have high credit card utilization, that's a signal to lenders that you might be under financial stress, more likely not to approve you. This next one people mess up all the time. Lengthen your credit history. The age of your accounts actually does affect your credit score.

So keep those credit cards open. Don't close accounts and focus on the ones you have open. Don't continuously open and accept every single credit card offer you receive, because then that shortens your history, and that will affect your credit score. Which leads into the next one, which is being cautious with new credit applications. Always finding out, is this application going to cause a hard inquiry or not?

And also evaluating before every application, is this something I need, or can I focus and get it accomplished with the credit that I already have? And if you're lacking that credit history, that's so important, rebuilding or starting your credit with using secured cards. Now, for those, you do have to make that initial deposit. And that's the amount that you have to spend, but you'll be amazed how quickly that can help build up your credit.

What if I get denied for capital stacking? Does that mean I can never get any funding? One of the great parts about capital stacking is because just because you get denied doesn't mean you're out of the picture. You can actually use what's called a credit partner, and here's why it's so amazing. So a credit partner is anybody in your life, business partner, spouse, relative, friend, basically anybody that has strong personal credit.

And what we do is utilize that credit partner's credit to get you the funding. It comes in the name of your LLC, so it's not showing up on their personal credit. It's instead in the name of your LLC. And in full transparency, yes, if you decide not to pay that loan back and you run off to Mexico, it will eventually show up on your credit partner's personal credit.

But I'll tell you, in all the years I've been doing this, I've never seen that happen. But here's what makes it so amazing and why I love utilizing a credit partner. It gets you the funding that you need right now. It doesn't show up on their personal credit, but it buys you a little bit of time to work on your own personal credit to get it where it needs to be to be able to eventually get that funding in your business but attached to you.