Tips To Get A Better Credit Score


– We all know that a lower
than excellent credit score is bad, but how much is
it actually costing you? I was talking to one of my
beautiful sisters the other day and she mentioned how she got
a cheaper price for something because she has a good credit score. Yes, you really are being judged
based on your credit score. Not by me, though. I like you no matter how
bad your credit score is. But this got me thinking
about how important it is to have a good credit score. So in this video, I’m
gonna go over four ways having a bad credit
score can really hurt you and in most cases, cost
you a ton of money. As I go through this
list, I’m gonna lay out actual numbers to help you
understand the true cost. One of these absolutely blew my mind and you need to know about it. Hey, I’m Jarrad, and on this channel, we like to talk about all things personal finance and investing. Please Hulk smash that thumbs up button, because I look at you the same
way that I look at giraffes, which is basically like I bet
you were just born awesome. Having a good or bad credit score is about as black and white as it gets. You either have it, or you don’t. I know they have ranges from
very poor to exceptional, but I would say that
anything less than a 740, which is technically a
very good credit score, would be considered very poor. Luckily, a very poor credit score is something that’s easily fixable. Depending on how bad it
is, it could take longer, but the important part is
that you have the opportunity to increase it starting today. One of the simplest ways to
increase your credit score would be to, of course,
pay your bills on time. Now, I know this should go without saying, but seriously, this is a huge deal. If you’re someone who’s very forgetful, like one of my exes,
then set your credit card to be paid automatically
every single month. I have one of my credit
cards that for some reason I can’t put on Autopay, I
don’t know why, but I can’t, so I have a reminder set on my phone that goes off every single
month on a Sunday night. Since I know that I’m not usually doing anything Sunday nights, it kind of makes doing
it that much easier. And if I am, then I just log
in to the app on my phone and pay the bill right away. Another way to easily
keep your credit score up is by not closing down all
the credit card accounts. A part of your credit score is based on the average age of
your credit card accounts. So if you have a credit card
that’s 10 or 15-years-old and you cancel it, then
your average credit age will decrease, which
hurts your overall score. Just like wine and whiskey,
the older the better. Allegedly, though, because I think that they both taste pretty darn gross no matter how old they are. Sometimes credit card
companies will automatically close accounts if they have not been used for long periods of time. If you get a notice in a mail
from a credit card company that they’re going to close
your account due to inactivity, then charge something to
that card to make sure that this does not happen.
A good way to make sure that you’re still actively
using an old credit card is you just put a small
recurring payment on that card, kind of like Netflix
or something like that. Just make sure to make that payment every single month, though. Hey, it’s me, and sorry
to interrupt this video, but this is Jarrad from the future. I’m currently editing the
video you’re watching right now and I realized hey dummy, you
forgot to mention two things. So I’m gonna add those two things towards the end of this video, stay tuned. Based on the Experian report, the average credit score
increases with age, which is a good thing because hopefully, we all get smarter as we get older, or it just tells us that by
that time we’re kind of forced to pay all of the bills that we racked up in our younger years. Another interesting stat that I found was that the average
credit score increased the more money people made. So basically, try to make as
much money as you possibly can. Look, having a good credit
score tells the outside world, how responsible and reliable you are. It’s a great indicator
as to whether or not you have a good handle on your finances. I know that some people will tell you that you don’t need a credit score, but go ahead and let
yours hit that big zero, and tell me how things work out for you over the next 10 or 20 years. It’s not necessarily a number
that tells the outside world that you love being in debt. It makes your life so much easier and gives you more options. Think if your credit score
like your adult report card. It tells you your personal finance story and gives some insight
into what your relationship with money has been in the past. Let’s get into the cost of a
bad credit score right meow. The vast majority of landlords
will run your credit report before they let you move in
to any of their properties. This might seem like it’s not fair, but put yourself in
their shoes for a minute. If you had a large investment like that, then wouldn’t you wanna a little assurance that the potential renter
had a good track record with paying their bills in the past? My sister recently told me that if she didn’t have
a good credit score, then she was gonna be charged extra $700 for her security deposit on top of the 200 she
had already put down. And her monthly rent would have increased by an extra $30 per month. This absolutely blew my
mind when she told me that. Someone with a less
than ideal credit score is not a protected class, so landlords have the right to do this. Who knows? They may not
even give you a heads up that you were getting charged more due to your back credit score, so you could be paying way
more and not even realize it. Another time having a low
credit score can hurt you is when you purchase a car. Now, of course, you’re gonna
get a higher interest rate if you finance that car, but the price of your car
is most likely going to be increased without you realizing it. When I was recently shopping for a car, I used the whole process
as a way to kind of gain as much insight as to how
they could be taken advantage of people like you and I, and
found out something like this. Like I said, you’re gonna automatically have to pay a higher interest rate the lower your credit score is. But they also automatically
hike up the price of cars, as well, since you’re a riskier borrower. You’re basically getting double hit on how much you’re paying for a car, even if you were someone who
has a decent credit score. They could still have that
special finance pricing baked in into the cost of the car. On a car I looked at, the price was bumped up by extra $700 and they weren’t willing to go down on it. And I was, of course, paying
cash for that car, too. They were just stupid enough
to leave that extra cost on that car price and
expect someone like me with an excellent credit score and paying with cash to pay for it. The lesson here is that car dealerships will always be scumbags no matter what. There, I said it and I
do not feel bad about it. The added cost of a car, if
you have a bad credit score, can range from anywhere between
1,400 and almost $6,000. Next, you’re gonna pay a
lot more for a mortgage if you have a poor credit score. Almost tens of thousands of dollars more. Most people wanna eventually own a home, but lenders need to know that you’ll be able to pay the money back. Even if you don’t wanna own a home, but eventually wanna start
investing in real estate, this will really impact your
ability to buy large assets for investing in the future. I honestly never realized how much extra you’re actually paying interest
with the poor credit score. Let’s look at an example. On a 200,000, 30 year fixed mortgage, someone with excellent credit would get a rate of about 4.322 APR and have a monthly payment of $992. The total interest that they
would pay over those 30 years would be a little over 157,000. For someone with a credit score in the range of 620 to 639, borrowing the same $200,000 would have a monthly
payment of about 1,188 and a rate of 5.991% The total interest this person
would pay over those 30 years is over 227,000. That’s an extra $70,000! The worst your credit score, the most it’s going to cost you. Keep in mind that lenders
don’t have to give you money for a home if your credit is shat. They could deny you altogether. That’s why I mentioned
at the very beginning that anything less than
a very good credit score, so anything below a 740 would be considered a bad credit score. You have a potential to be denied a job because of a poor credit score. I was actually really
shocked about this one so I had to do a little bit more digging and talked to some people
that I know in the HR field just to make sure that this wasn’t one of those old wives tales. I found out that this is very factual. Now, keep in mind that this
is all based on a company that you apply for a job with and not every business checks it. I’m assuming this is more
likely in the financial space, but one of my past colleagues who works for a different company which isn’t in a financial space told me that they would check credit scores of the people that they hire. She did ask that I not name
the company that she works for but she did mention that if
you have a bad credit score and the job is between
you and one other person, then this would be baked
in the final decision. So credit score isn’t the only reason someone wouldn’t hire you because there’s a lot of
things that they consider. But it is a part of those
many pieces to the puzzle that give them an idea of
if you were going to be a good fit for their company or not. Think about it. If you’re someone who has made bad choices with your finances, then
you may be a lot more likely to make bad decisions on the job. It’s tough to put an
exact number on this one, but if you were passed up
for an $80,000 per year job and you end up getting a job
that is $60,000 per year, then you’re essentially
out $20,000 per year. The cost of this one could
end up being astronomical, especially if you wanna
consider how much you lose in compound interest, if
you had invested that money that you would have been making. The first (doorbell rings)
(dog barking) Someone’s at my door. The first one that I forgot to mention is that you could get
denied a cellphone contract if you have a poor credit score. Now, I didn’t realize
this because I’ve been with the same cellphone
carrier for many years, so I haven’t really had to deal with this. But if you were someone
with a poor credit score and you were trying to
switch cellphone carriers to save a few extra bucks, then you might get screwed
out of that new contract. So I don’t know what the threshold is when it comes to the credit score, and when they would deny you, I couldn’t find anything on that. But for talking in terms of dollars, if you’re gonna switch
to a cellphone carrier that you’ll maybe save 20 or $30 a month, that’s like 300, $360 a year that you’re getting screwed out of because you have a poor credit score. And the last one that I forgot to mention is that if you have a bad
credit score then that goes into whether you have higher
insurance premiums or not. Now, the stats are 95% of auto insurers and 85% of homeowner
insurers fact your credit into their policy decisions, depending on the state that you live in. So I can’t put an actual
dollar amount on this because everyone gets
different insurance levels and coverages so I can’t tell
you exactly what the amount is but I would imagine probably a
couple hundred dollars a year it’s gonna cost you. If you haven’t before,
you need to start taking your credit score a lot more serious. Thanks for checking out this video. Please Hulk smash that thumbs button and leave a comment down below. Let me know your thoughts on this whole credit score thing. Check out these videos around my head and I have links in the description to help you all solve your
personal finance needs. I’ll see you in the next one, friends. Adios.

Paul Whisler

11 Comments

  1. Closing on my 2nd property in as many years in a couple weeks, my salary is sub 60k per year. Hurray credit. Self horn tooting aside (that sounds terrible but I'm leaving it), still pretty new to investing. I max out an employer match 401k, do you have a video going more into detail on a taxable investment account. You mentioned on a video that I can't seem to go back and find, didn't know if you had one that's more detailed. Thanks in advance.

  2. You said a mouthful here bro! Credit can definitely make or break you sadly. Value overload! πŸ‘Œ

  3. Credit scores are weird. Here's why, they only "measure" the likely hood of you repaying your debt IF you were to use financing and even that is a stretch. For those of us who occasionally use cash or alternative financing, the score doesn't matter and shouldn't even be considered.

    Also, the score we see isn't the same one lenders use. There are actually several different scoring models different lenders or employers use that we, the end user, can't change.

  4. Future Jarrod potentially paid my bills at one point of time…..πŸ˜…

  5. I was thrilled when my score jumped to 830 this month. I got a credit card in 1998 that I don’t use except every few months to keep it active, and have kept it just for the credit history.

  6. It's amazing how much money you can save just by doing the right things with credit.

  7. Adult report cardπŸ€£πŸ˜‚πŸ‘πŸ»πŸ‘πŸ»

  8. Great video on credit score, and DUDE, where did you get that black t-shirt? It's a great fit.

  9. Attacking credit catd debt has plummeted my score from above 740 to around 540. The score measures how you interact with debt. Why would lenders want someone to make minimum payments and carry a lot of debit. This system is messed up.

  10. Invest In Partial Shares With M1 Finance For Free (where I invest my money) https://www.debtfreeblueprint.com/M1Finance

    Get a FREE stock worth up to $200 when you open an account with Robinhood through this link: https://share.robinhood.com/jarradm14

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