Well, Merry Christmas buddy, same to you. Yeah, so obviously this is Christmas Day. We hope that maybe there's like a Christmas Ham going on inside the house, like like amazing flavors wafting through the house. Maybe you're outside in the cold shoveling some snow. Basically, it's like that's where you live. It's like a Norman Rockwell painting, except for earbuds. You've got those in your ears. Those did not exist back then.
And you're like, what are Matt and Joel Eve been doing working on Christmas Day? Are they like ebenez Or screws They don't take of course.
Yeah, we've recorded this ahead of time, but we did want to make sure that you had an episode here in case you were stay outside working shoveling snow or something like that. Maybe you're on the road to visit family, loved ones, some friends. But we've got an episode here to line up for you where we are busting up some of the different credit myths that exist out there. This is one of our besty episodes.
Yeah, there's a lot, there's a lot of bogus information when it comes to getting your credit score right. It's such an important part of your personal financial life, and so we figured, hey, we're not on a Christmas they we'll toss this one out there. So thank you, as always for listening to the show. We hope you enjoy this. Besty, Welcome to How the Money. I'm Joel and I am Matt, and today we are busting up some credit score myths.
Credit scores, baby, everybody's got one. It's kind of like a belly buddy like.
But oh, it makes me think of everyone poops. Did you know that book? Yes? I do. I think that book's on my mind because we are considering potty training Westy to cut out diapers from our monthly grocery.
But wouldn't that be nice?
Girl?
Are y'all thinking about doing that soon? Yeah, we'd like to. It's but the problem is, you know, you have three girls. I have two girls, and everybody says it's so much easier to potty train girls. So I'm like, we really nervous about potty training a boy.
Yeah, we've pulled down the the little Ikea Green, the Green and white little Ikia body got the same heat. Westy's totally interested in it. We just haven't pulled the plug yet. But I told Kay the last package of diapers that we just got. I was like, that is it, Like, let's commit, let's do it. We're gonna cold turkey do the thing where you know, there's this whole approach I don't want to go into, takes like a full weekend
of dedicated. Yeah, Like there's this approach where you just go cold turkey and you just let them go all eyes on the little dude, and basically they don't like that feeling of having just soiled themselves, and so they quickly learn like like even at night, no pull ups, nothing like that. Just like everyone poops, everyone does have a credit score. And that's what we're talking about today. That's right.
Yeah, But before we get to that real quick, mat, I just want to mention it is the beginning of spring right now. Basically like warmer weather and what happens when the weather gets warm.
The flowers are blooming, that's true, but.
Also the bugs come out, right and so especially in the South. Like I just had a tenant email me the other day and she's like, hey, by the way, I want to let you know, start to see some more bug activity at the house, which is my reminder that it's time to spray for bugs and.
For some diy pest control exactly.
We've talked about this a few times over the years, but it's worth revisiting because, Yeah, I wrote an article up on our site at how to money dot com just telling people how to do it themselves. And it's amazing how much money you can save because a lot of our listeners are probably paying something like one hundred dollars a quarter to a pest control company to come
for a quarterly spraying. So let's say you're spending four hundred dollars a year to combat bugs to keep them out of your house, Well you can diyatt and literally you will shell out no more then and actually less than one hundred dollars and in the beginning. And that's supply the sprayer and the chemicals. And this is not the chemical that you can buy at home depot, by the way, this is the chemicals that the pros use. You can get both for like, you know, roughly in the range of seventy bucks.
Yeah, and you're not just buying like a little spray bottle to like, you know, spray a bug by Like, this is professional grade stuff. And we crunched the numbers on it too, and literally once after do you get that you're only using something like two dollars worth of chemicals over the course of a year. Yeah, and so you're looking at four hundred dollars versus two dollars a year after that upfront cost, and it's easy to see that you are quickly going to be able to come out ahead.
And I think most people might hear that and they're like, well, there's got to be a catch, right, something's in fear in this process, or you know what, I don't think I'm going to know be able to know how to do this. And fortunately there are instructional videos on some of these websites where they will show you how to do it properly and really honestly if any dummy can do it, so it's not something that takes special skills
or anything like that. And just considering how much money can save you in one fell swoop, we're all kind of faced with higher rates of inflation, higher costs on almost everything. He's right now, if you're looking to save money in a big way in just like one fell swoop, this is definitely one thing to look at, absolutely.
And something else I got to tell listeners about we have we talked about about my bug assault gun on the show before you know what, I'm not the one that blows air, No, is this one that shoots the salt. Oh that's right, Sorry, that's right, that's right. So I got this for Christmas and it is the coolest thing. It's this little so basically it's like a little pump shotgun,
but it's made of plastic. It's a toy and it's got a little canister and you pour table salt in there, like like a tablespoon or two tablespoons worth of literally table salt. You close it up, you pump it, and when you shoot it, it literally shoots out like a little blast of.
A little bit of salt, kind of like a shotgun pellet.
It's literally a shotgun for bugs that shoots salt. And so this is the most fun I have ever had taken down little house flies in my house. I will link to it in our show notes because literally it is so fun. It's way more fun than the old bug zapper down to South Georgia, which very few people are aware of what I'm talking about here, But aside from the doipis control. If you want to get yourself a bug assault gun. I highly recommend it. I mean
it does sound like fun. I might have to get one, dude, just for the sheer joy. Next time you all are over and there's a little house fly or nat or something like that, let me take it. I'll let you have a shot with it, because it is a ton of fun. Good. I appreciate that. And it's just salt. And so you miss, or even if you don't miss, you know, you pick up the five but then like all the salt, it just kind of disperses a little bit. But it's salt. It's like it's not that big of
a deal. If there's a little bit of salt on the ground. Next time you're sweet or you a vacuum, you get it.
Up off the floor and you barely notice it until then. I bet exactly nice. Okay, Well, word to the wise, do your own pest control, save you some money, and bug a salt gun. All right, and let's move on. Let's mention the beer that we're having on the show. This one is called Hello World, and it's by Spyglass Brewing. And this one will send to us by listener Gary.
He sent us Monday's beer. Looking forward to having this one today and we'll give our thoughts at the end of the episode, but for now, Matt looking get onto the subject at hand. We are, of course tackling some credit score miss We're busting them up. And you know, it made me think, like there are all sorts of myths that have grown into legends over the years, over decades. H the lock disc monster is one of those, right, Paul bunyan UFOs, Like did they exist? Don't they?
All sorts of these like they're just drones.
You know, all of these things have developed outsized tales that make for interesting TV shows, and they're fun to talk about maybe on a Friday night over a nice craft beer with some of your friends, just kind of well,
I don't know, is it real or isn't it? And it's the same as maybe like the legend with the moon landing being fake, although I don't know, that's just kind of less fun to talk about and not so small contingent of Americans, they continue to believe in the existence of like a sasquatch like creature roaming the woods. But yeah, some have latched onto these tales. They've taken
them as one hundred percent factual. And you know, while I don't have definitive proof that Bigfoot doesn't exist, it certainly doesn't match up with what my eyes have seen firsthand. And part of the reason these myths persist is because there isn't documented evidence to the contrary, right, I mean, but credit score myths, on the other hand, well, they continue to exist despite hard evidence of their inaccuracies. And
so that's why we're talking about this today. I mean, these these myths impact your finances in a real and ongoing way, So we've got to discuss them in a way that maybe your bigfoot obsession doesn't impact your day to day life, it's right, man, So and if it does, you've got a real problem.
It's time to bust these myths up. And part of the reason too, that we're tackling this topic now is because of the fact that March it's National Credit Education Month. I bet you didn't know that.
Oh yeah, there's a thing everything. There really is a love for everything these days.
But there are also a lot of misconceptions and misunderstandings out there about credit scores and these myths. They lead folks to take just different paths like incorrect paths toward their credit It often impacts their score negatively, causing actual real side effects. And we want you to have a great credit score because it has such a wide ranging impact. Living without a credit score would be tough in a modern society, And like, is that a good thing that
we have to function with a credit score? Not necessarily. We're not huge fans of the credit bureaus and you know, specifically their inability to keep our personal day a secure. But it's kind of like we've been put down in a game that we just can't stop playing. I mean, you could stop playing, but you would have to need a pile of cash in order to truly avoid the credit score system altogether, in order to completely skirt it.
Yeah, it's kind of like even if you want to be an entrepreneur at age twelve, like you still got to finish high school. I mean it's it's it's part of the process, and.
You don't have to.
Your parents are going to get in big trouble if you don't, right, I mean it's.
Is there some law like do you actually have to finish high school? No?
I think you're going to get in big trouble if you drop out before before the age of sixteen.
I didn't know that.
Yeah, I think I don't know what the actual rules are, but I'm pretty sure you got to go to school, and to school, I mean you should, like I agree that that's probably it's probably a good, healthy approach to becoming a fully formed adult. I'm pretty sure the state can come after the parents if the kids come out. Yeah, if they take them out of school and there's no sign that they're doing any sort of homeschooling, what.
Kind of country are we living in. I don't know.
We might disagree on whether or not that's a reasonable thing, but it's reasonable.
But I feel like people have a choice.
Whatever, let's go, let's don't take your kids out of school.
They need it. I'm not aid school, like my kids are going to go to college most likely to worry. I want other people to have.
The choice if they choose not to, they choose to rip their kids out of school and just you know, send them down the Jeff Bezos path.
Yea, the genius kid and they're able to take whatever remedial course or class where they're basically able to get the equivalent of a high school diploma. Of course, they should be able to do that.
Right, Okay, all right, well, let's let's move on. Let's talk about what a good score is, because that kind of sets up this question of like, well, what are we aiming to achieve here with our credit score? And you know, Matt, you just mentioned one way to avoid the system would be to have just a ton of money ever loaded, right, Like you don't need a lender to approve you to buy a home if you've got five million bucks in the bank, and you can go
buy any home that you desire. But since most folks don't have that, most folks don't have that much money on hand, especially these days, like to buy a home, it gets really expensive. In a car, same thing, right, cars are not cheap, so paying attention to your credit score is a must. But then the question is like
what is a good score? And I guess you know, we have to tackle that because and it's actually kind of a difficult question to answer because there are different scales, like kind of like how we're talking about schools here,
how some schools might have an a scale. An eighty eight could be considered an a I guess in some schools, or a ninety I remember in high school when migrating scale changed and it used to be a ninety two and up was an A, and then they changed it to a ninety enough was an A. Seriously, yeah, in the middle of high school, it's so weird. A couple of my my as I've always been ninety and above bs are obviously eighty c's or no, it's it depends
on the school system. And so I distinctly remember, like two of my bees became a's all of a sudden, my GPA got a little.
Bit higher, and so it's funny.
Similarly, with credit scores, some of these bureaus have just a different threshold for what's considered good or great and so yeah, so the school that your lender sees when you're refinancing an auto loan, let's say, it can differ from the one that you get if you were to get that score directly from the bureau. And each bureau also has quite a few credit scores for you behind the scenes, so it's not even different models. Yeah, like there's this one score that you have for each bureau.
It's like they might have a dozen scores for you based on different factors, and so the score your lender sees when you're refinancing an auto loan, let's say, can differ from the one that you get if you were to get that score directly from the bureau. And you know, most of these scores are on a scale that goes up to like eight fifty or nine hundred, and some folks are striving for a perfect credit score under each one of these models, and that's just a recipe for
in futility, it's just completely unnecessary to strive for perfection. Basically, if your score is in the seven to forty plus range on any of these scales, that's good enough and it will basically qualify you for the best terms for different loans you might need access to. Just remember that seven forty or above is basically that a range where you're going to want to be in order to, yeah, get the best terms on all sorts of different lending products until they.
Changed the rules on you. All right, let's go ahead and get started busting up some of these credit score myths. By the way, you remember the guys from MythBusters back in the day, Like that's sort of the inspiration for you know, for the title of this episode for the listeners out there.
That was one of those first hit reality styles and TV shows.
Yeah, one of my favorite ones I remember was they were like blasting cannonballs into a wall. And interestingly, this was like one of the episodes where they screwed up and like they're out out in the desert, like at a firing range or like like a bomb range basically, and like the cannon like tipped up, and so the cannon ball missed the wall and it went ricocheting off of like one of the hills and into a neighborhood.
Oh my gosh, Yeah, super crazy. Nobody got hurt, but like I do remember like crashing into some of some dud's howls. I think it like went through a van, pretty serious, like and that's the day MythBusters got canceled, No, they did, Like that was right in the middle of a run of seasons where they were crushing It probably made for good TV rating, I think it did. Like that's the one I remember was the one where there was an errant cannonball. I could not imagine seeing that
in real life. Anyway, Let's do some myth busting of our own, and the first one we wanted to share is that your credit score doesn't really matter all that much. And there's a good reason that we're starting with this one because we want to highlight the fact that your credit score is incredibly important. It affects so much more of your life than you realize. We just talked about the need for a credit score in modern society, but everything is going to cost you more if your credit
score stinks. Lenders they're going to charge you what's called a risk premium if your score isn't great, but they also might decide not to lend to you at all if your score is in the dumps, and you might see to yourself, all right, that's fine, I'm not going to ever own a home. That's fine. Your credit score comes in play when you're renting a house too. Landlords they're gonna almost always run a credit check, and that is going to impact your ability to get the place
that you want. You know, if I'm choosing between two tenants, they both seem great, they both make the same amount of money. I've got to base my decision on something, and the credit score can often the scales. A bad or non existent credit score could also impact your ability to get home internet or cable, or it might require you to put down a deposit. You might even pay more for auto insurance if your score is low. Having a good, solid credit score is not a trivial thing.
Yeah, your credit score has an impact in so many areas of your life. And not only will a crappy credit score impact your ability to spend money, to take out a loan, to take on debt for something that you're looking to buy, which, let's be honest, maybe this is actually a blessing in disguise.
If you potentially keep you from spending more money, yeah, then you can afford to well. It can also hamper your ability to earn money. And yeah, your.
Credit history can have an impact when you apply for some jobs, like in particular ones in finance, or let's say you're moving up to management level, then there's a good chance your credit score comes into play here. Credit checks happen more often for these types of jobs where the stakes are higher, like when a security clearance is involved, or if you have access to a lot of money or sensitive information of your coworkers.
I don't know this for a fact, but I got to feel in that, like bank tellers, if you've got a really, really really crappy credit score, like maybe you don't get that bank teller job where you're you know, dolling out the hundreds, right.
Yeah, they might be like, sorry, go apply down the street at Target, and so yeah, you know, one study shows that twenty five percent of HR managers are actually going to check your credit history during the hiring process, even though they won't be able to see your actual score in most cases. But here's the deal. Your score is influenced by what's on your credit report. So if they can take a look at your credit report, they kind of, in theory, can deduce what your score is.
And that crummy credit report with lots of errors and issues on it is going to potentially affect your ability to get the job that you want.
That's a right, all right, We've got more credit myths that need to be shalat, and we'll get to all of those right after this break are back and we are busting up some of those different credit score myths. Yea, that you may have heard of, some you may not have heard of before. Let's get to our next one, which is checking your credit score hurts your credit score. I feel like this is one that's been around for a long time, and you know, like years ago, the
credit scords were kind of like shrouded in secrecy. Like the bureaus and the banks and the lenders they knew what our credit score was, but we didn't. Sort of like credit scores, we're kind of like fight club, right, Like the first rule of credit score club is to not talk about your credit score, you know where you're fearing that just like an utterance might punish your score where you would you know, see it drop significantly.
Yeah, it's like almost like the thought police would come after you. Like I thought about my credit card and I kind of wondered what my points score was total was And it's like, no, if you even asked that question your brain, they're gonna take your score down a not or two.
It's almost like you're just better off just hoping for the best. But luckily that's no longer the case. We all have access to our scores pretty much at every turn these days.
But I truly remember when that wasn't the case, because I I distinctly remember one of the first credit cards I ever got was at a bank that no longer exists called Washington Mutual that went.
Wahmoo, it went down.
You know, the great recession of the late to early two thousands. There two thousand and eight, and basically it was one of the first credit cards that made your credit score known to you on a monthly basis. They basically started the revolution of making credit scores widely accessive discovered. No, I think they came shortly after, and they've done a
great job doing that. But WAMO was kind of that first bank where it was like listen, no annual fee credit card, but you get to know your credit scred every month. So for you know, money nerds like me who wanted to, Yeah, I wanted to, and there was no other place on the internet where where I don't think this was before credit karma existed. This is before
the internet, not quite, but this is before electricity. I know, I'm definitely aging myself here, but it was kind of nice to have a credit score that would make that known to you. And you know, since then, obviously it's gotten so much easier to stay on top, and we'll
talk about that a little bit later. But I remember in those days where it was like haring to find out what your credit score was, and you like you either had to find that one random credit card that would do it or just kind of hope and pray when you applied for a loan that your credit was in decent shape.
Where you just had to know somebody on the inside. But it is important to know that there's a difference between a soft pole and your credit and a hard one. Hard polls will hurt your score, but soft ones won't. And so if you're getting a mortgage on a car loan, the lender is going to run your credit and that's considered a hard inquiry. That hard poll will ding your score just a little bit, maybe like ten points. Unfortunately,
like that's just the price of admission. Though after all, you know the credit viureors they don't want to see you applying for new lines of credit every chance that you get. But on that note, some folks have come to believe that shopping around for a loan is going to hurt your score. And you know that's true, that you will see an initial hit to your score, but that doesn't mean that if you shop with multiple lenders that it will send your score sinking even lower with
every single time that you get a quote. The beerers have it set up to where if you make multiple inquiries inside of a specific time window, and typically that's two weeks. Those like three or four or five credit polls they're just going to count as a single pole.
So don't freak out, like, we still want you to get multiple quotes, because it's definitely the best way for you to get the lowest rate, but doing that within a timely manner that's really important and it's good for you to know that that will not hurt your credit score.
Yeah, and that two week window is kind of the typical parameter used by some of the older credit scoring models. According to credit Karma, the newer scoring models that they treat multiple inquiries as a single poll as long as you make them, and they offer a much larger window of like forty five days, which is great, there's plenty
of time to shot. But unfortunately, as the end user, because some things are still shrouded in secrecy in the credit score credit report arena, you don't know what scoring model the lender you're getting quotes t FRUM is using. You don't know if they're going to new school or old school, and so.
It's like, are you using the vantage seven point six model? And they're going to look at you like, wait, what are you are?
Using the Fiico nine point one, Like, which model are you using? And yeah, they're like, go back to law moogeel out of here, mane. I'll be like, I can't. They don't exist anymore. But yeah, basically, it's best to stick with the fourteen day window to be on the safe side. Just keep that as your rule of thumb when you're getting let's say, quotes for you know, a mortgage through a lender, make sure you get all those
quotes in that fourteen days and you'll be fine. But on the other side of the spectrum, you're checking your own score via your credit card company or through a site like credit Karma, isn't going to have any impact on your score because that is what's known as a softball.
It's different.
And so yeah, you can check every single day if you want to, although that sounds like overkill and you might be a little bit too obsessed, But yeah, I think some people have that misunderstanding, Matt, that it's like, if I want to know what my credit score is, I'm gonna have to pay the price and it's going to hurt my credit score. And that is just not the case. You can check your credit score a whole lot,
and it's not going to mess with you. It's only when those lenders are doing a hard pull in order to determine whether you have a level of credit worthiness where you can get that loan or not. That is when it's going to ding your score just a little bit.
That is right next credit score, myth having debt will hurt your credit score. And what's really interesting about this one is that the opposite of this is kind of true. Some folks like they don't even call it a credit score, they call it like a debt score, which is actually it's slightly more accurate, even though it's kind of been used as a pejorative at times. But your score actually goes up if you have a variety of different loans and credit cards, as long as you're handling them all well.
It pays to have a variety of debt, namely revolving debt, so that's like a credit card where you borrow money, you pay it back, and then you can borrow it again, and then installment debt like a mortgage, where you borrow that larger lump sum and then you slowly make payments on that over a longer period of time. So if You've just got say one credit card, but you don't
have a student you don't have a mortgage. Even if you pay on time and in full every month, your score is not going to be able to go as high as someone who has a greater variety of debts.
Yeah, but at the same time, you shouldn't necessarily go back and take out student loans for a degree you don't need and just to improve your credit score. That would be the wrong waiting to out be foolish.
Yes. On that note.
By the way, paying off one of your debts can actually hurt your credit score, which is just kind of interesting. Let's say you've had a car loan for a few years and you finally make that last payment and you are so pumped, right, You're like, I no longer have to pay money towards this car. I own it free and clear, and what a beautiful feeling that is.
And I promise man Joel that I will never take out a car load again exactly, which we expect that in writing into our email inbox.
But you know the one downside to that, and I don't want to make it sound like it's a huge downside, but your credit score might take like a ten to twenty point hit in the aftermath of that loan no longer being on your credit report, it could negatively impact your score. And it sounds crazy, but it is actually true. And fortunately that ding typically doesn't last all that long. And this is definitely not a reason to keep debt lingering around in your life past the point that you
need to. Just like having a student loan might actually help your credit score a little bit, like you don't want to go get one just because it's going to help your credit score. Well, just because paying off that car loan could negatively impact your score for a small period of time doesn't mean you don't want to pay
it off. But it is smart to be aware because you know, especially if you need to use that tip top credit score to get a loan for a big future purchase in the near future, you want to be careful about the timing of when you pay off, yeah, one of those big loans, because yeah, if you're at seven point fifty you pay that car loan off, you're at seven thirty and you're applying for a mortgage loan, that could impact, yeah, the rate that you get on
something you're going to be paying on for thirty years, which.
Sounds unlikely, I think, maybe to a lot of folks as they're sitting there, but like, no, that's kind of how money works, right. You get a big bonus at work, and you're like, you know what, I'm gonna go ahead and pay off my car loan a little bit early. I've got six months left. Let's go ahead and knock that out completely. And we've got enough money now to put a down payment on the house. Boomshot, Like we're
crushing it. And then you find out that, oh, I'm sorry, so you don't qualify for the top tier rates a really nice rate, or I'm sorry, mam, you actually are going to oh a little bit more on the fees associated with your loan. It's just something to keep in mind. Just like Joel said, it actually has a higher chance of happening than you think. And so another credit score myth that we wanted to mention carrying a balance will
help boost my score. This one is sort of like the flip side of the coin from what we were just touching on, and a lot of folks have bought into this myth. You know, they're thinking having a nice mix of debt, that's helping out your score. So maybe not paying your credit card balance off, I should did the same thing, right.
It's like keeping that debt around to enhance your score.
Yeah, that's dumb. No, your monthly statement balance, it still gets reported to the credit bureau. But that doesn't mean that you should carry a balance and pay interest to the credit card companies instead. There's no need to neglect to pay it off. It's not going to help you. It's only going to cost you money in interest.
Yeah, but people just assume, well, let me let that balance linger, I'll pay a little bit of interest, but it's going to help my credit score, And that's just not true.
I think it's just oftentimes too just folks just fooling themselves. Yeah, right, because like maybe, like deep down you know that that's probably not true, but you thinking, no, you know, like there's a chance maybe that might be the case, but no, like do what you need to do to make sure that you're paying your bills.
This is definitely one that people like to trick themselves on, or at least they get tricked by. They assume that, yeah, if I just don't pay it off in full, I might pay a little interest, But it's going to raise my score, and so it's all going to wash out in the end. I need to work on my credit score, and so this is a way to do it, but in reality it has no bearing and actually it just hurts your personal finances if you do that. All, Right, next credit score. Myth we need to bust, Matt. Is
your banking effects your credit score. Well that's definitely not true, right, because, yeah, how much money you have in checkings or savings, it doesn't have any impact whatsoever on your credit score. Doesn't matter if you have two hundred grand in your savings account, like, that doesn't matter to the credit score people. They don't look at that. They don't care, it's right. So, yeah, it's very possible to have a great credit score but
be completely broke with nothing in the bank. Even however, that doesn't mean, right, the cash on hand doesn't matter, and lenders will look at your total assets to determine if they're going to approve you for any new credit, But it doesn't have any bearing on your credit score.
Right.
The amount of money that you have just chilling, And so it doesn't matter where you do banking either, right. Some people assume that the bank they do business with is reporting low account balances or lets the credit bureau know about an overdraft fee that gets incurred, And that's just not true. That stuff doesn't matter, doesn't factor into your credit score, and it's not getting reported in any way to the credit bureaus.
So just know that.
Yeah, the way you do banking, who you bank with, and some of those minor infractions that you might run a fout of, they're not going to impact your score in any way.
Yeah, the credit bureaus, they don't care what you do with your money. Like, it's not about your money. It's about other people's money, right, It's about the money that you've borrowed and whether or not you're paying that back, how you're handling that money. They don't care what you do with your money. Yeah, exactly, that's up to you. That's you and your business, Like are you a good borrower? Not are you a good saber? Exactly. Yeah. Another myth
we wanted to get to. There's this one where you should hire someone to help fix your banged up credit score. We completely disagree with this one. There's nothing that someone on the internet claiming to help your score can do that you can't do for yourself.
Oh man, there's so many bold on anxious claims on the internet too, Matt.
Yeah, well yeah, you got to ignore all the most of all those false head lines. This is just a waste of money, though, and oftentimes it's an all out con or a scam. Oftentimes they're going to try to charge you an upfront fee and then they end up not being able to deliver on the promises, which often includes claiming to be able to remove that negative information from your credit report, even if that information is accurate.
They cannot do that. That is not true. So avoid anyone who says that they'll fix your score if you just pay them some money.
And I think this is another just too good to be true sort of thing right where people are like, oh, yes, if I don't pay my credit card balance, my score will magically go up. Or wait, if I pay this person, you know, five hundred bucks a thousand bucks, my problem of a crummy credit score will quickly dissipate. It's going to be gone. But it's just like a good rich quick scheme. Like the promises sound appealing, and when you're in that mind, you want things to get fixed quickly.
Anyone things will be easy, yes, but in reality that's not how it works. And basically you're always swindled out of your money because there is no way to just change your credit score overnight.
Yeah that's right, just like you can't just take a pill and magically get fit. Like it takes hard work, it takes discipline, and really wish you could though personal responsibility. But we'll talk more about how to raise your credit score and how you can do it without anyone else's help, and we'll get to all of that right after this break, Right, Matt, you got to.
Talk about how people can heal their own credit scores without paying big bucks to scam artists on the internet. We'll get to that in just a second. I wanted to cover just one more credit score myth, and maybe it isn't even a myth anymore, but you know, a question we've been asked on the show multiple times has to do with the impact on your credit score by
closing a credit card that you're not using. This is something that there's still just a ton of confusion in that arena over and this is important to cover because your credit score, it's composed of a number of factors, and really we should we should talk about that because you might be hurting yourself on two of the main fronts if you cancel an older card. So some people I get the impulse they want to cancel a card because they just paid off and then balance their credit
card debt free. And what they want to do is get it out of their life.
Or maybe they're like Marie condoing their life and they're just, yeah, I want just to simplify, simplify, and we're cleaning house, close, close, close.
And then find their credit score takes a beating, right, And that's because, first of all, the age of your credit matters, So the longer you've had the card, the more it's helping your score. And yeah, if you cancel it, that's gonna that's gonna impact you negatively. Also, credit utilization is an important term that you've got to be familiar with. Basically, the bureaus want you to have a lot of available credit but to be using very very little of it.
Basically it shows restraint, which makes you look like a better borrower. It's like, oh, look at Jack over there, or look at Jill over there. It's like they have just so much credit access but they use so very little of it, they must be a stupe borrower who
doesn't get in over their head. So yeah, instead of canceling a card, we would suggest keeping it open even once it's paid off in full, which is what we suggest, Like we don't want you to have any credit card debt ever, but yeah, use it every couple of months, continue to pay it off in full and on time, and that card is going to keep helping you out even if you found maybe better rewards and perks with
another card. Or you're like, listen, I'm just out of credit card debt altogether, and I don't even want to be bothered by by this thing anymore. Still, you can still cut it up, or you can still stick it in the freezer, whatever you need to do. But what you don't want to do is call the credit card company and cancel that card altogether.
That's right. And you mentioned too, using a card like maybe every couple months to kind of keep that line active. I'll mention that I've got at least three cards that I never use. They are cards that I have laid to rest, so to speak, and I only use them one like literally I think once a year now, and that at least in my case, you know, your mileage may vary. In my case, I've been able to keep those accounts open by literally only using those cards once
a year. And that is a City card, a Discover card, and a Capital One card. H and so it may not even take you using it every couple of months. But it also too, I mean, it kind of depends on how many lines of credit you have, right So if you've got I don't know, I mean, if you've got twelve credit cards, if there's one that's you just really want to get rid of, maybe specifically if it has especially if it has an annual fee and you're not getting any value from that card, that account would
be a great candidate to close. First of all, you've got multiple lines of credit already, and so it's not like you're going to be significantly reducing your card utilization. But again, the fact that you're paying ninety potentially ninety five bucks a year, whatever the annual fee is, you need to make sure that you're actually getting that value from that card if you're going to be paying that exactly.
I think that is one of the only reasons I think I have an article up on the site about when and how you should go about canceling a credit card. Where we'll put that in the show notes. But I think, Matt, the one other thing you could do if you have a credit card with an annual fee is you can call your credit card company up and say, hey, can you actually transfer me to another credit card yeah, that
has no annual fee with the same issuer. And oftentimes they'll do that, and so it retains that credit history, but you still get rid of that annual fee. That's kind of pesky, exactly.
Yeah, they're happy that you haven't completely lost your allegiance to them as a company, and you are happy because you're not having to fork over that money for or no value in return. And so you know, we also want to make sure that you don't feel the need to obsess over your credit score. You touched on this earlier, Joel, but like it's an important part of your personal finances.
It's worth keeping tabs on. But it is possible to be too attentive to your credit score, and so we want you, if this is you, we want you to limit the amount of time that you're giving it, like maybe just check it once a quarter in order to know, you know, what your score is looking like. You can
even just set a calendar reminder for yourself. It is important because a dinged credit score can tip you off to something that you might not be aware of, that might have been added to your credit report, maybe even by mistake. Discovers credit scorecard credit Karma, they're two of our favorite sites for checking your credit. They'll even give you a peek under the hood of your credit score
to see what might be causing the problem. You'll find some helpful education tools there as well, and studies have shown that just knowing your score is an important step towards improving it, so that awareness it goes a long way towards doing the work to make it better. But we don't want it to be something that you're checking every single morning, like before you check your email. Like it doesn't need to be a part of your routine. Yes, no, I'll completely agree.
I think that the diagnostic feature though of those websites is really helpful because if you're saying, Okay, I see what my credit score is, it's not in the best spot. I really want to raise it to that seven forty plus level that Matt and Joel we're talking about how do I get there, Well, you'll see the areas that are holding you back. And it might be length of credit history that might be one of the biggest things.
Or it might be on time payments, which if you've had a few of those, those are going to hurt your creditscore in a big way. Those will over time fall off. But there are all these little things that you can see as you're looking at that diagnostic toolkit on those sites where you can know where to focus your efforts on how to make your credit score better. And I think, yeah, you don't pay anybody money right
to do something that they can't actually do. But when you look at that and you figure out what's holding you back, then you can address it with how you handle your credit in the future totally.
And here's the thing.
If you do check your credit score and you find out that it's taken a hit, well, then make sure to pull your credit report from the site Annual Credit report dot com. And I kind of alluded to this earlier math that the credit report and the score are
two different things. The report kind of list out all the things that are happening with your credit and the score gives you a numerical reading of what you're you know, what's basically on that report, and so if there are any errors, you're going to want to make sure to file a dispute directly with the with the credit bureau where that issue lies. And so, yeah, something like one in four credit reports contains an error. So there's no need to stress if your report has something fishy on it.
It's not like you are an anomaly.
A lot of.
People have this issue. Sadly, the bureaus they don't do an amazing job at responding to those disputes. Their track record has only gotten worse over the past couple of years. And yeah, here we would say that's not right. The credit bureaus need to do a better job. And it is borderline infuriating that they have the powers that they have to amass all the data on us that they do and then to pack and sell our credit scores without actually having to verify that the information is accurate.
But here's the thing, you've got to beat the squeaky wheel in order to get that error fixed, because the credit bureaus they're big behemoths. And yeah, you've got to be like that little David beating up Egliath in order to get change actually to happen to make sure your credit score reflects accurately the truth about what's happening with your credit.
That's right, And by the way, real quick Annual Credit Report dot Com you can still go there, Like they should call it weekly credit report dot Com because like it was the middle of the pandemic when they switched to you being able to get all three reports for free every single week.
But I hope that becomes normal forever.
Well, things haven't changed yet, but it's set to go back in the middle of April to reset, and so those free weekly reports are running out. So if that's something you haven't done yet, now would be a great time to go ahead and get get in there, get all three before the usual rules come back to play.
But but, like you're saying, jel, like we're not big fans of the credit report the scoring system as it stands, largely because of the depensity for the errors that you're just talking about, and the reality that the credit Burea is that like they could care less about the errors themselves or helping you to resolve them, because again, you are not the customer. They are selling your data to
their actual customers. You are the data, yep. But those errors they can prevent folks from getting loans, you know, even sometimes getting jobs. But credit scores are a reality that we all have to deal with. Not paying attention to your credit score or pretending that it doesn't exist, that's going to eventually have a negative impact on your life.
You're not going to be able to qualify for a home loan that you really want, or you know, maybe you won't qualify for the best interest rate at least increasing the monthly cost of that mortgage. You can hate the game, but it is still smart to play it, Like, even when the rules of the game are changing, like even by now pay later, that is starting to become something that is getting incorporated into credit scores. It's something
that we all need to be aware of. We need to know how to play the games, even if we're not the biggest fan of the game.
Yeah, so let's give a few final tips, just kind of.
Maybe to sum it up.
Yeah, Like, well, how are just a few ways if we were going to give you just three or four suggestions on how to improve your credit score the most quickly, right, what are your big takeaways for this st effort? Right, I would say that kind of thing. One thing, of course, is to pay your bills on time, right, And if you don't do that, that is going to dig your credit more than anything else. Late pays or not paying are going to be the worst reflection on you as
a borrower, and they're going to crush your score. And a single missed payment, Matt can lop one hundred points off of somebody's credit score. So yeah, use debt smartly, pay off your debts as you've agreed to. Basically, you don't want to get in over your head. Don't kid yourself into thinking that taking on a big car loan is smart just because it's going to give your score
a bump. That's a bad move. Intelligently using a few different credit cards each month to pay for your needs and then paying those balances in full is helpful, and then don't close those accounts. So, yeah, you want access to these varied kinds of credit, but only credit that you can handle, only credit that you can use wisely, And yeah, credit cards are a portion of those. Using
them intelligently is going to help your score. Having seasoned credit in your possession is a good thing too, right, Like we said, the longer you've had some of those credit products around in your life, especially some of those credit cards that you've had for a decade plus, it's like you don't want to get rid of that because that is having a helpful impact on your credit score.
And then Matt, for somebody out there who says, I've got a really bad score and you know, I can't even get a credit card right now, Well, if your credit score is in really poor shape, we would recommend a site like self dot, Inc. And that's our favorite place for people to turn. They have these credit builder accounts and they're a great way to quickly build up your score through a credit builder alone. So that's one
of the first things we would recommend. That's one of the best places to go to be able to quickly start jumpstarting your score. But yeah, I think we actually did an episode specifically for people who have a rough or busted up credit score, right episode one thirteen.
If you want to dig back into the archives and listen.
To that one, Okay, yeah, we'll link that in the show notes as well. But yeah, there are different tactics that you're going to want to take if your credit score is already just completely in the dumps. But again, this is one of those things that you can do and you do not need the help of some faux Internet professional to get you to where you need to be.
That's right. And by the way, if you have kids and you want them to reach adulthood and have a great credit score, it's actually pretty easy to get them started off on the right foot. One of the best ways to accomplish this is to make them an authorized user on one of your credit card accounts, but not give them an actual card. And that's the trick. You don't want your eight year older I guys running around with a credit card. But this assumes that you have
and you continue to have and maintain good credit. But the credit bureaus, they're going to see your child with access to that good credit you know themselves, and it will, by association, inflate their credit worthiness. It's a nice little, nice little tit nice little hack. We've talked about this maybe on the show. Was it like a year ago, maybe year and a half ago, And I haven't checked my kid's credit But at that point in time, I added my kids to one of my cards. They're still
on that card. I still use that card. And pay it off on time in full. Some guessing they've got pretty stellar credit.
I think they say their prayers every night, like please Lord, lynd Daddy pay his credit card bill so he doesn't hurt my credit now. But no, you're right, like that is one of those things that you can do for your kids, and it can be really helpful for It's like a nice little service you can starting them off
on the right foot a little bit of credit. Yeah, all right, I want to ask you one question here at the end, because I think right now credit scores still matter a great deal in our society, right and it's one of the things that we're saying that you kind of can't get around. You have to pay attention to it. It's part of the game, the personal finance game that we all play, and so you just have to be ready to suit up and do your best.
But yeah, do you think that credit scores in their current iteration are think?
Okay, yeah, like you're diving into the fiction now, Yeah, the possibility, I only deal in fact, ten years in the future, will credit scores play as big of an impact in our personal finance lives as they do today? I mean they do now. I think as different apps come online, like basically all I feel like all the different finance apps are in an arms race right to
get as many customers as possible. Whether that's initially an app that allows you to transfer money to your friends very easily because they have that app as well, and then all of a sudden, guess what, Oh, you can buy a bitcoin with that app. So all of a sudden, now you can transfer money, you can save in that app,
and you can also quote unquote invest. The next thing that a lot of these apps and money management platforms I think are allowing their customers to do is then borrow money, which guess what if they know all of your transactions, then they have your history. I could see them not necessarily needing to go to the credit bureers and get an actual credit report or credit score from them. So it depends, I guess, on what the future of
the different finance apps look like. That is one path forward, but I'm not going to say that that's where we're going. I'm just kind of I'm laying out the future like this could happen or this could happen, but I'm not going to necessarily say that that will happen. But do you disagree, like you seem less optimistic about the future of credit school.
I think people are so fed up and frustrated with the credit bureaus. Something's going to give at some point, and I think we've already seen alternative.
Are they fed up or do people just not care? Right? Like, like when there's a data breach and fifty million people have have their's local security just floating around out there in the dark, one hundred and fifty minions, one hundred and fifty like, people don't care. They still have the same passwords that they've used for five years. You included I know some of your passwords, and I'm always like, I'm pretty sure I can guess you.
Know, I'm trying to break into my accounts.
Well, your new Netflix passwords is okay. Well, I'll say this.
I think that you know, they get the highest complaints of when it comes to scam attempts.
And that is when it comes to getting shut down.
And I think that some folks in the government have already floated the idea that maybe a centralized control of credit scores could take place, some sort of government run system. I don't know if that would be better because the somewhat not really privatized system we have right now isn't working very well either. But I could see just companies making decisions based on some of your other public profiles, so how you act on social media, and maybe oh my gosh, joined it. I know, but I think it's
already happening to a certain extent. I'm curious to see what happens over the next ten years.
But it's interesting. So you see it maybe going towards a more centralized, you know, mechanism, either more centralized or completely decentralized. I see it being more decentralized with these independent different companies who are setting up shops with either within an app or just with within a site, but I.
Think more likely, and they start to communicate to each other when they need like some respective information to kind of fill out all the dots on. I could see that an application that you've you know, that you've.
Submitted that definitely feels less big brother, you know, I mean, come on, the future is on the blockchain anyway, So that's that's the direction we're going. But that's gonna be it for credit scores, do Let's talk about this beer for this episode This was Hello World by Spyglass Brewing Company, sent to us by Gary. What were your thoughts on this beer? All?
Right, so I think this was maybe even a touch better than Monday's beer. Oh really, it's hard to say that.
But I thought you were going to say that this one wasn't as good because I thought this one was a touch sweeter. Okay, it was a little bit sweeter. It was like a little more juicy, a little more yeah, Like I don't know, just juicy is the.
Yeah, I think you're right on my head, But I don't know.
Man.
I really enjoyed both these beers. They were both really really different examples of hazy IPAs having different hot profiles. It is just amazing the way that different hot varieties mixed together can create just a completely different profile. And it always surprises me where I'm like, wait, no fruit's used in this or wait a second. It was just like two different hops and that completely changed like the
flavor profile. But hops are just so versatile, and so this beer just kind of showcased a different kind of hop that had a distinctly different flavor profile. But Gary just sent in us some slammer beers.
This can Yeah, absolutely, which, by the way, so you saying, oh, there's no fruit in this beer makes me takes me back to one of the beers that we said that on, which was Woodland Pursuit that was a humble Forger beer, And it turns out I did look it up and in fact, it did have fruit in it on the can. They don't want to advertise it. Yeah, on the can, it didn't say anything about fruit anywhere on the can.
But when you go to the website or you know, go to the brewery, it actually was a fruited I believe it was a fruited IPA because Woodland Pursuit it was crazy off the chain fruit and you and I were just like racking our brains as possible. Were they able to pull that kind of fruit flavor out of this beer without any actual fruit and only with the hops. I don't think that's what's going on here. This tastes like a classic hazy double IPA And I wanted to point out to the label for this one. I love
it's a black background green MSDOS print. It reminds me a lot of one of our favorite local brewers here, Halfway Crooks for sure, or they're kind of going with like that. I don't know what do you call it, like nerd sheet or something like that, But Halfway Crooks they've combined like the old world with like sheep and the European tradition of pilsners and loggers. Sounds weird, but they do it well and combined it with the nerdery of ms dos in the early computer days, which funny enough.
I mean, that's just that's that's the perfect blend of the two dudes that started that brewery. Yeah, because one of them is from Belgium, Dan, and the other owner is Sean. He's from Georgia Tech. It's another one of the reasons why we love that brewery so much. So if you haven't, just right now just stearch Halfway Crooks and just check out their merch. We think it is just the dopest stuff around. And I feel bad because we should be talking about Spyglass that we're talking about
one of our family. Similar aesthetic and similar aesthetics on this beer you'll see in the picture of this label. Why we're talking about you compare something that you've just experienced to something that you love and consider to be excellent. I feel like that is the highest compliment. It's a good sign. So Spyglass Rocks, thank.
You Gary and company percenting this one our way. We appreciate it, and Matt, that's going to do it for this episode. For folks who want the show notes links to some of the things that we mentioned on this episode, just go to our website at howtomoney dot com.
That's right, So that's gonna be it until next time. Best Friends Out, Best Friends Out,