BA Q&A: Credit Score Jumps Like Jordan

my Fyco score? Since it's used to measure so many important things. Please advise when you can. Thank you so much.

thirty five percent sorryest payment history. So that's the biggest meaning do you pay the people, Regina or time Virginia meaning they just want to know, like, are you a regular on time payment person? And one of the ways you can offset that, Regina, is to automate as many bills as possible so you don't forget and you're not late. I was late again this week for something I totally forgot. My credit score is just going to look like I

don't know what I'm doing. Because there's a credit card that I never use unless I travel, and then I swiped it when I was overseas and I forgot because I never use it, so I don't have automatic payment on it and I forgot, So down goes my score temporarily. So payment history thirty five percent automate payments to affect that. Part of your Freyco score thirty percent of your Freight Go score is amounts owed, often referred to to as utilization that month means how much could you borrow versus

how much you actually borrowed. But they basically want to look at your limits versus your balances. So if you have a hundred dollars limit credit card, ideally you want to keep the balance under thirty dollars dollars under thirty percent, So they look at each individual card, but also cumulatively

at your cards, so the average. So if you've got one card that you've got one hundred dollars limit on, and another card that you have one hundred dollars limit on, and one you're not using it all, and one you're using, say like one hundred dollars balance on, So this card you're maxed out, this one you're not using it all.

If you close then not used card, you went from fifty percent utilization because you're only using half the money that you have available to one hundred percent utilization, which is going to bring your score down, down, down, down, down down. So keep your utilization low. Basically, pay off your debt. Okay, fifteen percent is length of credit history. You just got to live a little longer and keep your older cards open, you know, like if you have one old card, that's what I like to just keep

one old card open. Ten percent is new credit, also called inquiries. That just means the next time you go to Marshalls, don't let them people run your credit just to see if you can save ten percent on that. You know, And in career, is anybody other than you who looks into your credit and it brings down your score. And then last is a credit mix. They just like to see a mix that you have some like installment loans like student loans, car no blah blah blah, and

also revolving debt like credit card debt. They just like to see you have experience. You don't have to do anything there, just live longer and as an adult you have more of that. So ultimately, you want to pay down debt and you want to be on time. So here's a little trick that I found out how you can trick the credit scoring system in a way that's super legal. I call it my jump like Jordan method because I'm forty two, so Jordan was the lebron of

the day. Actually, let me not even say that Jordan was the Jordan's child. So here's what you do. You go to your cheapest bill. For me, it was my gym membership that I was never using at what's that place? The gym membership is only ten bucks, Mandy, Planet Fitness. Yes, Planet Fitness, that nine ninety nine gym membership that don't nobody ever use. So I had that membership, and normally that membership was just pulling the money directly from my bank account. But I put a credit card that I

had a zero balance on in between. I said, Planet Fitness, charge this card, and then I said, bank account, automatically pay off the card every month. Something magical happens when you pay off a debt in full every month. The amount doesn't matter. It's the habit of paying off. They

like to see. That's that payment history. You paid off a debt, even if it's five dollars five hundred five thousand, five million, ideally five dollars, So you create that automatic loop and you will start to see your credit score start to jump like Jordan. Because your credit score is your GPA. It is an average of your grades of

how you handle your money. So every time you pay off your card in full, even if it's only five dollars, you get an A. So the more age you get, the more it will offset any of the bad grades you got in the past. So if you do that, Regina girl, you should be fine.

In all of that, there's auto Fyco scores. There's I mean, obviously we all know FICO is like the main score used for mortgage lending, but there's an auto version of your score. I was just looking it up. There's versions of your score for.

Credit Karma, credit Sesame. There's probably more that I don't remember, and you know those are estimates and there if there's significant differences between age, like I don't know, how could I define significant like twenty five points or more, thirty point points or more, then maybe there's something amiss with

one of your credit reports. And it's good to keep tabs on all three of her credit reports that you get from the three different bureaus that could explain what Maybe one of your scores is a little bit different, Like for example, if credit sess Tome is pulling your score from a certain credit bureau and Credit Karma is pulling it from another one and they're very different, then I would check the one that's different and see if

something on your report that they're pulling it from. Has there's an error or something hasn't fallen off quite yet. But yeah, I just keep that in mind. And you know, at the end of the day, if they're like close enough to one another, I wouldn't stress out. I feel like too much about it and like obsess over them every sing on one matching.

So like the auto loan people might want to know, well, I want to see how much that they have in installment loans because auto payments tend to be installment loan. So I want this type of FYCO score. And the credit card people are like, well, we want to see like a FIGHTO score that leans heavily on revolving debt because we're revolving debt, because credit cards are revolving debt. So ultimately your job is not to know all the nuance is just to have a decent score in general,

and you should be fine across the board. I don't worry about my score, like honestly, I'm probably gonna drop like thirty stinking points for forgetting to pay make that payment, But what do I care?

a payment. It was like, girl, you're late, and I was like, damn, So you're right. I probably will call Bank of America and be like, don't tell all me. But the truth is, I don't worry about my credit score, like for real, unless I'm like I think to myself, in the future, I need to borrow something, because that's the purpose of it. Your credit score is so you can qualify to borrow something at a good rate. I don't like the car I have is paid off. I don't have a mortgage, and so I'm not going to

be renting an apartment anytime soon. But certainly you want to keep a decent credit score just in case. But I wouldn't stress so much over him and just continue to collect good quote unquote grades to off at that credit GPA your score, so the more age you can get. When my score felt significantly in my twenties, I actually did that with two cards where I paid it off every month in full, and that really helped to expedite bringing my score up. So good good luck to you, Regina.

just recently got approved for an FAHA loan. The problem is that for the market I got the loan in the loan, which is four hundred and twenty thousand dollars, is not enough for my big family. As an immigrant, I'm the only one that qualifies at this point to make this stream come true for my parents. I make mid income at one hundred and sixty K, but I'm not approved for a higher loan than what Fight goes offering because my credit score is pretty low it's six

point fifty. I also got in a car accident back in November, so I need to get a new car and was waiting on purchasing a home until after the home. However, now I'm thinking I should buy the car and wait for the credit score to qualify me for a bigger loan. However, would it be better to get the car and use the down payment for that or hold on? Interest rates are going up and gas prices are ridiculous. Thank you

so much for some contact. I work from home, so I don't need a car, but maybe if I bought a car it could help my credit score to Oh this is juicy and juicy, where do we even start, my goodness, Well.

So I wanted to just for her for some clarity that even if you got your credit score to eight fifty, it doesn't mean they're going to let you borrow more necessarily because you're borrowing the amount is really based upon another score called your debt to income ratio, meaning how much do you make versus how much do you spend on debt every month? They want to just kind of know do you have enough money to pay for this house.

And so even if you have an eight to fifty credit score but you make two dollars a month, they're not gonna be like, oh my god, with this eight to fifty girl, were going you can buy a million

dollar house. It's like, no, you don't make enough. So I just want to just make that clarity that, like, they're not gonna let you necessarily borrow more because you have a better credit score, but you will borrow at a better rate, and you know it might bump you up a little bit, like you know, because the rate is better that you can afford to, like like your your mortgage payment would be lower, and maybe you could afford a little bit more house, but it won't make

it as significant as much of a difference as like just making more. But I will say this what you can think about since you have a big family. This is what my husband and I and the time we're thinking about is to get a multi family house because what they will let you do is because for example, same thing with Jarell. We were looking for a home and I could not because I had a foreclosure that was still active on my credit score. So they're like, girl,

kick Tiffany off this mortgage application. So what he was able to afford wasn't as much as we wanted to in order to purchase a home. But they're like, if you get a multi family house, they will take the rent that you'll get into consideration for more income. I think it was about sixty percent. So let's just say, let's just for easy numbers, at my house with making one hundred thousand dollars a year, and they were like, your rent was going to pay you for the house

one hundred and fifty thousand dollars. They would take sixty percent of that and add it to his income to say, when you live in this house, this rent is going to help increase his income, and so we can include that to allow you to afford more house. So consider a multi family house and that rent might be able to boost up what you could afford as far as the house was concerned. So that's just something to think about.

I question though, I'm like going back to her question four hundred and twenty K, so I was just quickly doing some googles to see so that's like the minimum well faha loans again, like they're meant for the first

time home buyers. People with lower income and lower credit scores can qualify, and you know, they're a great entryway into home ownership, but because they are federally backed, they have some limitations, and depending on where you live, the limit for how much you can borrow can be capped. So four twenty is at the lower side of that limit. I wonder if she's not asking about what if she wants to borrow additional on top of that four twenty, because it's not enough to afford the like the size

of a home that she's wanting. And if that's the case, that may explain where her credit score comes in, because if you're getting like a jumbo faha, like that's actually possible. So that's like when you there's a cap on how much you can borrow with the product the faha loan and if you want more because the home is do you want four family members to live with? You need to bring her home. It costs more than four twenty, which Jesus like, you can't even get homes in my

neighbor for four twenty right now, is nuts? And anyway, you talk.

too much. Meanwhile, we're all of eleven, like girl, what are you doing? But no, you're right that that might be the case, but consider multifamily, but also too The problem is, like I said, that debt to income ratio, purchasing a house is not just going I mean, purchasing a car now is not just going to affect you know, maybe your credit score, you know, because you're I'm assuming you're gonna you know, finance and they're gonna have to like run your credit that your credit score is going

to take a dip. But also now you are going to affect your debt to income ratio because they're going to say you owe someone else, Like mortgage companies are jealous. They don't want you to have other booze. You have to pay money to this, right, and so now you're gonna oh, like, oh, you owe the car company tooown no child. So I especially since you don't need a car, you know, I would work really hard if if you're listening. Well,

obviously you're listening. The question before this talked about we talked about how to raise your credit score. I would lean into those techniques of raising my credit score and work on the home. I would also consider like a really great program. I like, I know you've been approved for faha, but consider this program called NAKA. We talked about it before. NACA's NACA NACA dot com stands for the Neighborhood Assistance Corporation of America, and it sounds like

you're a first time home buyer. They will get you even lower interest rates. It's a long process, but you have to raise your credit score any races, so you have SUN okay, but with NAKA you'll get like, you know, I'll give you an example, maybe if interest rates were currently So, my's brother in law is buying the house that Drell and I purchased together for a rental property.

But I don't want to be a landlord. Drell wanted to be a landlord, and so we're selling it to his twin, which is awesome because he actually painted it for us. He's a master painter, so it's like, you know, this is great. The house gets to stay in a family. He loves that house, but he was going for the FAHA loan route, which he's got a good credit score. And then my sister was like, don't forget about NACA. Right now, interest rates are like five and a half

six percent. NACA is offering three and a half percent, significantly lower. It's going to lower his monthly payments significantly. And now it's a process because he won't be able to close until like another like two or three months, so it's like a six month process, but it's gonna probably take you about six months to raise your credit score. I would use that time sign up for NAKA now, so maybe you can lock in an even lower interest rate.

I mean, I don't know what fat interest rates are right now, but nacause are the lowest in the country. So just consider NACA dot com. That's just not going to offer their own type of loan.

My heart goes out to you. I wish someone who making one to sixty would not have this kind of issues buying a damn house in this country, but here we are. But the best thing you can do is to take your time and wait until it makes the most financial sense for yourself. And I'm and sometimes it's frustrating because it's not like when you want it to be. And I get that, so thinking of you. Thank you so much for your question. Hope that's helped in some way.

And we will see y'all next week from more b a Q and A.