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The greater number of one time payments that you accumulate, the more season your credit profile is considered. Right, and we'll get more specific with that. These timely payments form. What's the basis of your borrowing power? You guys? Throughout this presentation, you guys are hearing me say barring power a lot, right, and barring power just means your ability to borrow and at what terms are you able to
borrow at? Right? Lenders utilize this term frequently and it just means how risky do they assume you are based on your credit profile. Right, what what what what history or what what borrowing abilities or debt management skills does your credit profile speak to based on the history of your accounts?
Okay?
So, in other words, your barring power does not align just with your credit score, does not necessarily align with with your credit score. Right. There are so many individuals who have a high credit score, good credit or or or or vice versa, and they their barring power may
not match their credit score. Right because, contrary to popular belief, your your credit score and your credit profile are two totally separate things, right, And then another thing on top of that, lenders are not as concerned with your credit score as we are as consumers, Like we're more concerned with our credit scores. Excuse me, guys, We're more concerned
with our credit scores than lenders are. Right. So, when you are filling out a credit application, your credit score is not the determining factor on if you will be approved for said card or car or home. Right, it has a little, it has a little to do with it. However, it's never going to be the deciding factor. It's always
going to be your credit profile. Right, And that just means what makes up the last seven years of how you've behaved in your credit, right, what does that speak to the history on all of your accounts and all of that right now, the total number of late payments on each of your accounts, as well as the ratio of accounts with late payments to those without, both influence how many points you're actually getting of those one hundred
and ninety two point five. And in other words, to make it very simple, not only are you judged by how many one time payments that you have versus mispayments, but another factor that goes into determining how many of those points that you're getting is how many accounts that you have that has never had a lay payment. So let's just say you have five accounts on your credit report, and then three of them you've been late within the last seven years, you would only have two accounts with
one hundred percent positive payment history for seven years, right. So, in other words, if you want to obtain as much of these points as possible, or hopefully every single one of them, you would not only have to have no lay payments for the last seven years, right, but you can't even have like derogatory accounts collections or charge offs in all of that right now, Just to relieve you guys a little bit, you are not expected to have
a perfect credit score. In fact, only one percent of the population has a perfect credit score of an eight point fifty, So you don't actually have to strive for a perfect credit score in order to have substantial barring power. Right, And that's what I wanted to talk about today, Just little things that you can do, that you can change
starting today that'll impact your barring power in a positive way. Okay. Now, other factors that goes into determining how many points you're getting is the time since your last mispayment, the degree of lateness, So obviously you can be thirty days late, sixty days late, ninety days late, up to one hundred and twenty days late.
Right.
The type of account that you have a lay payment on, there is a hierarchy to lay payments, right, a hierarchy in the sense that, for example, mortgage accounts, lay payments on mortgage accounts are considered the worst type of lay payments. So if you have a mortgage and you have a lay payment, that's one to wag weigh more heavily in a negative way on your barring power. And your credit score than if you were lay on let's say a
credit card. Right, So the hierarchy is mortgage accounts those are the top dog, auto loans, revolving accounts which are credit cards, and then retail accounts. So those are going to be like your furniture accounts. If you have a retail credit card or something like that, those are like considered you know, low level accounts. Therefore their lay payments of course still does affect you, but it does it
impacts you less than the other account types. Okay, again, how many one time payments you add to your payment bank will speak more to your barn cards. So the more on time payments that you have, the better, the better your credit profile is. Right, here's the tip. The top one percent of borrowers one percent meaning like obviously they get the top offers. The top one percent of borrowers have successfully made more than five hundred on time
payments on their credit profile. Right. Remember that five hundred number, because just the little tipig trick between me and you, the that your credit profile records five hundred at least five hundred payments within the last seven years, you immediately you immediately your your credit profile gets taken up to the top threshold. The contingency, I want to say, the contingency is if you like, this does not work if
you've had a collection within the last twenty four months. Okay, now, if you have had a collection within the last twenty four months, your credit profile will still be ranked higher than what it would have before you had five hundred payments.
But if you don't have a collection within the last twenty four months, that is a sort of like cheat code, right, it's a cheat code in order to take your credit profile to what's probably a lower level based on whatever your your credit profile looks like, immediately to the top ranked amongst the top borrowers. Right. And there are tiers
when it comes to barring power. Right Like, two people can apply for the same application, they can even have the they can even have identical credit scores, but they're not going to have the same barring power. Right Like, one may get approved for one thousand dollars, one may get approved of five hundred dollars. And how much you're approved for is determined off certain things that you have
shown on your credit profile. And in this example, the goal should always be at least five hundred payments within the last seven years, right, And that sounds like a lot, but it's not a lot because I've already done. I did a calculation for you. All you have to do is have six accounts which will will record seventy two payments per year towards your payment history for seven years. So if you maintain six, if you maintain at least six accounts, and if you have student loans like this
is very easy to do. If you maintain if you maintain at least six accounts for you know, over over the course of seven years, then you'll get your five hundred payments. Now. Obviously, if you have more accounts than that, then you'll you'll reach it faster. Right, But that's one of the for sure ways to ensure that you are getting, depending on the rest of your profile, all it or most if not all, of those one hund ninety two point five points, right. So that's sort of a way
to make your credit profile resilient. Right, Like if you do if you are getting most of those points or all of those points, things are not going to impact you as much as they would impact someone else that's not getting all of the payment history points because it is the largest factor of your credit score, and it lends more than more than any other category. Right, So remember that five hundred payments will automatically make your credit
profile considered experience automatically. It's not an opinion thing, it's statistically. If you have five hundred one time payments obviously not lay payments. So five hundred one time payments recorded, which again in the last seven years, your credit profile will automatically be considered experienced, okay. And make sure they're on primary accounts. So if it's an authorized user account, they
don't they don't. They don't impact your barring power the same, So make sure you are doing these with primary accounts, okay.
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