In This Article
Struggling with your credit score? Tiffany Grant, host of Money Talk with Tiff Podcast, shares easy-to-follow strategies on improving your credit.
From understanding credit scoring models to getting free credit reports from the government mandated website, find out how you can increase your credit score and be on your way to financial success. Don’t miss out on this invaluable advice – tune in now!
Every Tuesday, Tiffany answers one of your submitted questions. To submit a question for an upcoming episode, visit here: https://www.moneytalkwitht.com/asktiffany
Additional Links & Resources
Need to book a consultation? Click here!
Intro/Outro: You know what it is? That’s right. It’s time to talk money with your money, nerd and financial coach. Now tighten those purse strings and open those ears. It’s the money talk with Tiff podcast.
Tiffany Grant: Hey, Hey, and welcome to Tiffany’s take where I answer your money questions right here on the podcast. If you would like your question answered, just go to www.
moneytalkwitt. com. dot com forward slash x Tiffany. And I’ll be more than happy to answer for you. So for today’s show, I had a question of how can I improve my credit score? So everybody wants to know how to improve their credit. So first and foremost, I’m just going to dive right in. I want you to understand what credit is.
Okay. So credit is something that lenders will use to. See if you’re somebody that they would like to lend money to. And so a lot of times you’ll find that they’ll pull your credit report and or credit score in order to make that decision. Now I did go into the five C’s of credit in a blog post, but for the purposes of this episode, maybe I’ll do that as another podcast episode.
But for the purposes of this episode, I wanted to get into just some strategies, some tips around your credit. Um, so that way you can start working on that. So first and foremost, let’s talk about the different scoring credit scoring models, because I think that that’s important. A lot of people think that you only have one, two, maybe three credit scores, but honestly you have hundreds, right?
And so that’s why. Depending on the lender, you don’t know what they’re going to pull and what credit scoring model they’re going to use. So to give you an example, if you go to get a car, they’re going to pull a different credit score than if you were to get insurance, right? Um, if you went to go get a house, they’re going to pull a different credit score than if you were applying for a credit card.
So there’s so many different credit reports. I mean credit score, sorry, out there, but they’re all based on your credit reports. Now you have three credit reports. You have Equifax, TransUnion, and Experian. Good news is that you can pull those for free once a week, ever since Covid, so it used to be once a year and you would go to annual credit report.com.
That’s the only government. Mandated website. Anything else? It’s not the legit thing. Okay, so some people get confused and go to like free credit report or whatever. Those are for-profit companies. That’s not the government site. The government site is annual credit report.com. You can pull your credit reports from all three bureaus.
Once a week, which is big. Um, now do you need to do it that often? Maybe not, but, um, it’s great that you have the ability to now, if you’re not online, you can also do it by phone. If you dial 1 877 322 8228, or you can do it by mail. And I have a blog article, which I’ll link in the show notes that tells you step by step how to do this.
So if you are multitasking and doing something else while you’re listening. Just feel free to go look at that, but definitely pull those because what happens is you can go in and make sure that everything that’s reporting on your credit reports is accurate. Now, all three may be different. That’s another thing to point out too.
Some lenders report to one and may not report to the others. Some report to all three. Some may report to two and not to one, you know, and so you want to make sure you’re checking all three of them in depth to make sure that they are reporting accurate information. Now. Thank you. If you find that they are, let’s get into how, and for the purposes of this podcast, we’ll talk about the FICO credit scoring model, okay?
So with FICO, your score can range anywhere from 300 to 850, okay? So with the FICO credit scoring model, quote unquote good credit score is considered anything like 600, 650 or better. You don’t have that, then I’m glad you’re listening to the episode because we’re going to get into what you can do. Um, now what constitutes the credit score?
It looks at different aspects of your credit history. So payment history is 35%. So that is Have you made all of your payments on time? Amount owed, so how much do you, the lenders that you already have loans with or credit with, that accounts for 30%. The length of your credit history, so how long have you had credit, um, that accounts for 15%.
Your recent applications for new credit lines, so that’s your credit inquiries, That accounts for 10%. And then the types of credit use. So there’s different types of credit. For instance, your credit cards would be considered revolving credit, but there’s also installment loans, which are like your auto loans and mortgages.
And so they want to make sure that you have a good mix and that accounts for 10% of your FICO credit score. So now that you know what constitutes your credit score, let’s talk about some strategies that you can use in order to maybe improve it. So first and foremost, you want to make sure that you pay your credit card balances strategically.
So if you have credit cards, um, especially now, since credit card rates are on the increase. It’s getting harder and harder to keep up if you carry a balance from month to month. So you definitely want to focus on paying your credit card balances. And if you remember when I was going through the percentages, how much you owe is a huge part, which is also called your credit utilization is a huge part of your credit score.
So as you pay down what you already owe, your credit score will inevitably go up. Um, so you want to make sure that you prioritize that. Now you can also ask for higher credit limits. So if you can responsibly manage a larger line of credit, this could help improve your score by lowering, lowering your credit utilization rate.
And Let me give you an example so you can kind of see that in action, because this is a strategy that I use occasionally. If you have currently a credit line of let’s say 1, 000 and you use 500 of that, that’s 50% credit utilization already. Now let’s say for instance, you take that same card, you call them and you say, Hey, And I have, you know, step by step what to say on the blog posts.
I won’t go into that here, but let’s just say, Hey, I want to increase my credit. What do you want to increase it to? Let’s say 2000. So if you do that now, your credit utilization. automatically goes lower, even though you use the same amount of money. So 500 out of 2000 is less than 500 percentage wise, it’s less than 500 out of a thousand.
So that’s another strategy that you can use to kind of improve your credit score. Um, another thing, and I would say use this with caution because it can work both ways, but you can become an authorized user. on someone else’s card, that is responsible with their credit. And I say that because I have been in a situation where someone added me as an authorized user and I didn’t ask them to, they just did it, family member, and they had used up most of their credit.
And so what did it do to my credit? It So that’s why I said you want to make sure that you use this option responsibly, but that is something else that you can do. You want to make sure that you open accounts that report to the credit bureaus. Not everything will report. So that’s one thing that I do X whenever I’m opening a new credit line.
Do you report to the bureaus? Um, cause that’s important information. I actually talked about on the podcast before how I had a client and she was paying all this money. And it was similar to like a payday loan kind of find out they didn’t even report to the credit bureaus. So you want to make sure that.
Whatever account you open, report to the credit bureau so you can get credit for those payments that you’re making. Um, going back to my previous point, make sure you maintain low balances. Keeping your credit utilization, which is the percentage of your available credit that you’re using, low can help improve your credit score.
So, typically, um, you’ll see that people say Keep it below 20%, um, 25% or what have you. Just keep it as low as possible. I know sometimes, um, you know, you’re not going to be there right now, but just make a conscious effort to, uh, make it there, review your credit reports regularly. So I told you at the beginning of the episode, how you can pull your credit reports.
Pull them often. You never know what’s going to happen with your credit. Someone might use it. I’ve had clients before where someone had went to the hospital and used their social and everything and all of those bills and stuff was reporting to on their credit report. They had to dispute it. They had to go through a whole process, but if you stay on top of it, you can catch it early before it really affects you.
Um, and speaking of make sure, like I said before, you’re removing all of that incorrect or negative information. If there are mistakes, get them corrected and that can help improve your score. Also I will say if you do find stuff on there, call the creditors. Don’t be scared to call the creditors, but when you do make sure that you do not say that you’re going to pay, um, the debt, just.
Do an inquiry, say, look, I see this on my credit report. What is this? And have them tell you what happened to me was that I did that and come to find out I didn’t even have, they didn’t even have the debt anymore. So the customer service representative was like, you can just dispute this. Um, and it will go away.
And it did. And it hasn’t come back because they no longer had that debt. So, um, and I go step by step into how to do that. Including what script I use to get it done on the blog post, but make sure you check that out. But you can absolutely do that as well just to inquire and see if it even exists. So I’m not going to get into a ton more because I want to keep these short, sweet to the point.
But if you wanted to read more in depth into how to improve your credit or check out some other credit episodes that I’ve done with guests and solo, then check out those show notes because I will put all of those links in there. and that will help you get on the road to better credit. Um, so thank you so much for joining me on the Money Talk with Tiff podcast today.
Like I said, if you want your question answered on the podcast for Tiffany’s take, which I do every Tuesday, just go to www. moneytalkwitht. com forward slash X Tiffany, and I’ll be more than happy to answer for you. So until next week, I hope you have a wonderful rest of your day. Hi,
Intro/Outro: thank you for listening, joining, and being a part of the money talk with TIFF podcast this week.
You can check TIFF out every Thursday for a new money talk podcast. But if you just can’t wait until next week, you can listen to previous podcast episodes at moneytalkwitht. com or follow TIFF on all social media platforms at money talk with T. Until next time spend wise by spending less than you make a word to the money wise is always sufficient.
Tiffany Grant: Yeah.
In the latest episode of Money Talk with Tiff podcast, host Tiffany Grant helps you understand credit and credit scores, discusses the impact of different factors on credit scores, and shares various strategies on how to improve and manage credit scores effectively. We’ve gathered all the key takeaways from this episode, so you don’t miss out!
Understanding the Basics of Credit Scores
Tiffany starts by answering a listener’s question about improving their credit score and defines credit as a tool lenders use to assess whether they want to lend money to an individual. She highlights that:
- There are many credit scoring models and hundreds of credit scores.
- All credit scores are based on three credit reports: Equifax, TransUnion, and Experian.
- You can pull these reports for free once a week via annualcreditreport.com, the only government-mandated website.
Breaking Down the FICO Scoring Model
One of the most common credit scoring models is the FICO Scoring Model. Tiffany dives into its components:
- Payment History (35%) – Your consistency in making timely payments.
- Amount Owed (30%) – The amount of credit you’ve already used based on your credit limit.
- Length of Credit History (15%) – The amount of time you’ve had different types of credit accounts.
- Recent Applications for New Credit (10%) – The number of hard credit inquiries you’ve made in the past year.
- Types of Credit Used (10%) – The variety of credit accounts you have, like credit cards, loans, mortgages, etc.
Strategies to Improve Your Credit Score
Tiffany shares several effective strategies to improve and manage your credit score:
- Pay credit card balances strategically – Prioritize paying down high-interest cards first.
- Ask for higher credit limits – This can potentially lower your credit utilization ratio.
- Become an authorized user on a responsible person’s card – This can positively impact your credit history.
- Open accounts that report to credit bureaus – Choose financial products that report your good credit behavior.
- Keep credit utilization low – Keep your balance below 30% of your credit limit.
- Review credit reports regularly – Catch and fix errors as soon as possible.
- Remove incorrect information – Contact creditors and credit bureaus to rectify mistakes on your report.
Beware of Identity Theft and Report Errors
Tiffany warns listeners about the danger of having someone else’s debt reported on their credit due to identity theft and urges them to call creditors if they find mistakes. She shares her own experience in successfully fixing credit report errors by contacting her creditors.
Take Action and Learn More
To further dive into the world of credit scores and get more in-depth information on improving yours, explore some more articles!