Here's EXACTLY how to increase your credit score fast, get an 800 credit score, and leverage cheap debt.

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Key Moments In This Episode
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0:00 Intro & Summary
00:26 Credit Score Explained
02:29 Credit Score Factors
02:36 Payment History
03:54 Credit Utilization
04:59 Length of Credit History
05:58 Mix of Credit Types
06:38 Inquiries
08:24 Credit Score Ranges
10:15 How To Monitor Your Credit Score
10:53 Credit Score Tips To Increase Your Score
12:20 Outro

Video Outline
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To get a perfect credit score you have do well in these five areas:

First: Payment History

The first and most important is your Payment history - Payment history makes up 35% of your credit score. Your payment history tells the story of the number of accounts you’ve paid on time, how often you make or miss payments, the average number of days your late payments are overdue, and how quickly you repay an overdue payment.

Whenever you miss a payment, your credit score will go down. And the longer you wait to make a payment, the more it affects your credit score. That’s because being 180 days late is worse than being 90 days late which is worse than being 30-days late.

Something that most people don’t know is the ratio of accounts you pay on time to those you are late on also impacts your score. So if you have one or two accounts that are marked late but four or five others that show on-time payments, that is taken into consideration.

Second: Credit Utilization

The next category is credit utilization and it is the second most important category making up 30% of your credit score.

Credit utilization is the percentage of available credit that you use.

If you have a credit card with a limit of $1,000 and you use $500 of it for the month, then your credit utilization rate is 50% for the month.

You generally want to keep your credit utilization under 30% per month to avoid hurting your credit score.

Credit utilization rates are only used for revolving credit, like your credit cards and lines of credit.

Installment loans like your home loan or car loan are not included.

Third: Length of your credit history

Length of your credit history is the next category, and it is 15% of your credit score.

It measures three things:

1. How long accounts have been open
2. How long specific types of accounts have been open (revolving and installment) and
3. How long it’s been since you last used these accounts

Your length of credit history starts the very moment you open a line of credit and, in most cases, the longer your credit history, the better it is for your credit score.

I use the term in most cases because a 2 year credit history with no late-payments would be better than a 10 year credit history full of late payments.

Fourth: Mix of Credit Types

Mix of Credit counts for 10% of your credit score and looks at your ability to use different forms of credit. That’s revolving credit like credit cards and installment credit such as your mortgage and car loan.

In general, your credit mix is considered a lot less important than say your payment history or credit utilization, but it is still a factor and should be considered.

5th: Inquiries

The last category is Inquires and it is 10% of your credit score.

Inquiries occur when lenders “inquire” about your credit history and pulls a copy of your credit report.

There are two types of inquires to be aware of: Soft inquiries and hard inquiries.

Soft inquiries like viewing your own credit score does not affect your credit score at all.

Hard inquiries like applying for a mortgage or car loan will affect your credit.

In general, inquiries won’t have a major impact on your credit score, it might knock it down up to 5 points” but having a lot of inquiries within a short period of time will likely have a greater impact on your scores.

To build good credit, think of your credit score as a monthly test of your creditworthiness, and the 5 categories as 5 sections of the test.


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Disclaimer: The information provided in this video is for informational purposes only and is not meant to take the place of professional legal, accounting, or financial advice. If you have any legal questions about this video or the subjects discussed, or any other legal matter, you should consult with an attorney or tax professional in your jurisdiction (i.e. where you live).

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