Rebuild Credit | Understand Credit Score To Rebuild Credit

Looking to rebuild credit? Duane here with How To Build Credit TV and in this video I'm going to talk about one of the main things that you should know in regards to rebuilding your credit But before we get started I have a quick message Once again my name is Duane with how to build credit TV

This channel offers 100% free information about how to build credit, how to get cash back actual cash money from using credit cards, as well as credit card reviews So if this sounds like something in which you're interested be sure to subscribe and click the notification bell so you don't miss a thing Alright in my other video I talked about three tips the actual three tips that I used to rebuild my credit score The first thing was number one get a copy of your credit report Number two know your credit score in other words find out your credit score and number three get a secured credit card

In this video I'm gonna talk more specifically about our credit score and how it is comprised There are actually five categories that make up our credit score the first one which is worth 35% of our credit score is payment history Payment history just simply refers to paying your bill on time not having late payments This is very important this is actually very easy to accomplish if you're starting from scratch and regarding in regards to building credit If you are brand new and you just have one credit card and you always pay a bill on time for like let's say a year

You're gonna have 100% of that category which is 35% of your score comes from payment history So it'll be easy if you're starting off brand new but if you've had a couple of mishaps just like myself in the past This category is hard to maximize because you won't be able to get 100% and one or just 100% just simply refers to the fact that you've paid all your bills on time right So when you miss a payment or you miss several payments it's gonna lower the overall percentage or grade in that category So for me for example mine was at 89% for the longest time because I had a couple of things on my credit report I still do that I'm waiting to fall off of my credit report because they normally fall off after seven years

So just recently mine went up to 91% And I'm gonna actually get in my phone and show you guys exactly how, how the credit score is rated and that's the good news about when you use apps like the creditwise app with Capital One or Credit Karma or nerd wallet So I'll show you guys that in just a second but the first category like I said is payment history and that makes a 35% of our credit score The second category that makes up 30% of our credit score is credit utilization There is a lot of wrong information out there about this category A lot of people seem to think that as long as you're around 30% that that's good in actuality that is not and I'll log into the app and show you guys that as well

You need to be between 0 and 10% So if I have a credit line of $10,000 10 percent of that would be one $1,000 I do not need to be any higher than one thousand dollars If I have above one thousand dollars then I'm gonna be moving out of the excellent category for that particular for that particular part of my credit score So you want to be between zero and ten percent and I'll login to the app and show you guys exactly what I'm talking about The third category that makes if our credit score is credit history or another in other words time that we've had credit Okay so like if this refers to how long we've had credit or have had credit established

For example the longer you've had credit let's say I'll open a credit card back when I was in college And I've kept that card open for the last 20 years then my credit history will be very good it'll actually be in the excellent category versus if I open a credit card and I've only had it for three years and I've only had credit established for three years So this category credit history is talking about that and that makes up 15% of our credit score The fourth category is new credit and new credit kind of refers to when you apply for a car or a loan or a house loan They pull your credit report okay so it really kind of has to do with getting credit inquires

So that's what new credit has to do with and so the more you pull your credit report the more you kind of ding your credit score overall You should not have more than two pulls on your credit report for a year And I'll show you once again I log into the app and show you exactly what I'm talking about New credit makes up 10% of our credit score The fifth and last category that makes up our credit score is types of credit that is 10% as well

Types of credit refers to what kind of credit you have Like a car loan would be one type of credit a credit card with people one type of credit a store credit card would be another type of credit house loan would be another type of credit So this refers to the mix of credit that you have And this is only 10% of your score but this is a part that makes up the entire credit score S,o there are five categories the first one being payment history number 2 credit utilization, number 3 credit history or credit history referring to the length of how long you've had credit

number 4 is new credit like new accounts and number 5 is types of credit which is the mix of accounts Alright so for this part of the video I'm gonna go ahead and log into my credit computer and show you guys or specifically how these categories are made up so I have my phone here I'm gonna go ahead and touch the Credit Karma app and I will put my fingerprint there to log me in okay and you guys will see this on the screen So once this pulls up alright so I have two different credit scores you have transgene and you have Equifax I'm gonna go and click on the Equifax just to use this one as an example Alright so the first thing which is 35% of our credit score is payment history so as you can see I'm at 89% the reason why I'm at 89% is because I've had some past bills that I wasn't able to pay And so what happened was it clearly affected me so those things actually will fall off of your credit report after seven years

SO what will happen is I think I'm I think the last ones supposed to fall off this October so automatically I should be at least 95 to 100% in that category which will bump my credit score because right now I'm at 89% and 89% is actually not good let me see 89% is probably below average to be honest with you okay so when I get that off my credit score will go up because I'll be let's say I'm getting 25 percent out of the 35 percent in that category and let's say I get to 100% as far as my payment history is concerned then I will get the full 35 percent out of that portion of my credit score okay the next category is credit utilization which is 30 percent and as you can see it's on the screen here so I'm having 1% currently this app is really good because it shows you your total limit You see mine there is 18,000 and then it shows you how much I actually have on all my cards and so currently at the moment when this report came out I had 147 dollars which is clearly less than one percent So that's really good As you can see on the phone screen here it shows

You a lot of people think around 30 percent is good for credit utilization and as you can see that's absolutely kind of wrong or not really wrong but you're just not getting the max amount You see 30 percent on the screen here and 30 percent is kind of in the caution right it's not in the green it's kind of in the caution category So my advice is to be between zero and ten percent to max out and to actually get 30 percent of this particular category which is credit utilization alright so let me go ahead and go back Alright the next one here is length of credit okay or like credit history like how long have I had credit like what's the average age of my credit And as you can see here it's three years and nine months that's not very good

I'll tap on that so you guys can see If you have credit established for nine plus years then you would be in you'd be getting 100% of this category right This category is 15% of our credit score so as you can see my credit my ah I'm between two and four years which is like a little above average I guess but that's not really good In order for me to maximize this category I need to have had credit for a long time like if I had a car from college and I still had it open now I would totally be maxing out and getting the max 50% out of this category Alright let's go on back

Alright the next one is going to be total accounts and total accounts is kind of it has to do with like mix of credit That's ten percent of your score So this total accounts it's showing how much accounts I have and this parts interest and of course I'm gonna have some of this blocked out there's no personal information here But this part is interesting because let's say I had a student loan which I did and I do I that student loan it works to my benefit in that like it's considered to be established credit which is kind of weird or let's say I bought a car ten years ago even though that account is closed it's still it still serves under here as an account that I've had and it serves towards total accounts So as you can see on the screen here it says 21 plus accounts would be the very top end of this right so that you would be maxing out the percentage that you could get towards your credit score

Alot of people believe that you know you need two or three cards the more credit card you have the better you're looking right at the screen here and it's showing you between 0 & 5 is the lower end Okay and between 11 to 20 would be closer to where you would need to be So you don't necessarily need that many credit cards you just need credit types are you know types of account like a loan car loan those are different things that goes towards this category Aright let me go on back and show you guys Okay so we have derogatory marks of course that affects your credit score this is a very high impact on your credit score

So make sure if you have derogatory marks here that you know after a while if you can pay for it pay for it but if you can't you know after 7 to 10 years it'll be gone So the reason another reason behind my scores higher with Equifax is the one derogatory mark that I thought I still have and I do TransUnion shows it it's still on my credit report so that's why the TransUnion score is lower and I think it falls off in October okay so that's pretty straight for the last one here is hard inquires this one is very important Okay so every time you apply for a loan a credit card, maybe cell phone, maybe electricity you're pulling your credit and so in this category what you want to do is you don't want to have any inquires within the past two years So as you can see zero we'd be considered to be excellent one to two is okay three to four is caution or average so the closer you are to the green the closer you are to maximize every single percent that you can out of that specific category

Now I know that was a lot of information but if you're very diligent about rebuilding your credit and you actually want to do it you definitely got to get in there find out this information come back and watch more videos for me because like I said this is something that I've experienced myself and I just kind of learned it along the way alright Thank you guys so much for watching the video please be sure to LIKE, comment, and subscribe I can't spoke right Anyway thank you guys for watching this video until next time take care and be blessed peace!