How to Improve Your Credit Score #010

I want to do a tip. So this struck me as really important and it's actually really influenced the way I enjoy beers and how good they are because I've done it a different way and they don't taste as good. So when you buy a six pack or whatever, when you buy a beer, sometimes you have the desire to chill it in the freezer real quick so you can

drink it that night or something like that. I think it's really important for the beer to avoid bottle shock and bottle shock and just kind of mess with the taste of a beer is to have it in your fridge overnight, to let it chill naturally gradually instead of yeah, gradually, and then pull it out. Another important tips, So let your beer chill overnight gradually, and then when you pull it out, let your beer warm up for thirty minutes before you pop it open. Um. I think the warmer

your beer gets, the more flavors are open. So if you're drinking like cores light, who cares, right, drink it cold? Drinking cold because you don't want those flavors to come out tap the rockies. Yeah, but if you're drinking a good beer, you wanted to warm up a little bit and those natural flavors are gonna come out more. And so I was just thinking about it because our beer today and we'll get into it in a minute is dog Fish Heads Oak aged Vanilla Worldwide Stout, and I

was like, okay, I gotta pull this over question. We need to warm that up. It needs to warm up because, like I'm going to get those extra oak and vanilla notes if it's warmer. That's true, man, I hadn't thought about that. We do that all the time without really thinking about it, but just from having had numerous craft beers in the past decade. But yeah, we should do that, Hooks. That's that's a good tip. So there you drink your craft beer and drink it better make sure it tastes awesome.

And also I just want to say thank you to all the people that have left ratings and reviews on Apple podcast Man, all the glowing reviews, Thank you guys. It's huge for us. Man, it's huge for us, and so um it makes me feel good about myself. We're on episode ten right now, and if you have been listening since the beginning or just really gotten in the last few episodes and you're into what we're talking about,

it's helpful. I would ask you kindly to please leave us a rating and or review on Apple Podcasts or wherever you listen to your podcast. It's super helpful and just um helps other people that love craft, beer and money talk find our podcast. Yeah, Joe, so Atlanta United. We are both big fans uh and we were recording this a little bit ahead of time as we haven't had our first match against uh DC United. Oh Atlanta United. By the way, it's it's our soccer team, right, It's

our Atlanta soccer team. I wanted to talk about jerseys, like the expensive jerseys. Yeah. The reason I asked I want to bring that up is because I grew up not not wearing jerseys. It's just wasn't part of my childhood. I wasn't huge into sports. You didn't even grow up wearing pants, So I grew up in the in the woods naked. You're one of the woodland people. Is that a boy that lives in his eyes? Every once in a while, they're like feral children. No, but dude, jerseys

are so expensive. And I was curious because I was thinking about it. Back when we used to go to the Braids all the time when they're in town. You know, you always had Atlanta Braves jersey. Uh and you would always rag me if for not having any any of like team gear. But I wasn't gonna spend the money on I mean close to like a hundred bucks on a on a nice jersey, you know. And this past Christmas scored a sweet you know, official jersey, which I'm

super stoked about. Uh So, how do you justify that? You know, you've got something you support and love your team, but then on the other hand, you've got crazy ments of jersey and they changed to you. That's what's so crazy is that every every couple of years. Uh. I mean some some leagues they're even required to update their jerseys. Yeah, give me your thoughts, all right. So here's how I

approach stuff. Like buying a jersey. That is something I typically will not buy for myself because of the expense. And I usually ask for something like a jersey or a hat or something like that for a team that I love and follow, for Christmas or for my birthday. So that's usually like I did, yeah exactly, I like put it on the list and I know that I want something like that. So you know, it was my birthday in February and my folks got me one Atlanta

United jersey. And then I had some birthday money and I decided found a sale and I bought another one. So those are the two that I'll need for hopefully the next three seasons because I don't mind wearing last year's or two years ago jersey, but um, it is nice to have that just to support my team, and then to have an alternate one in case I like completely sweated that one out or something. True, I feel like I can wear an old jersey as almost like a point of pride and be like, yeah, I'm not

gonna buy that new one. And as well, we're not super super cheap. We we're not willing to spend money on something that we really love. All right, let's move on to the beer. We're over at my house tonight recording and a palatial alt Mixed studios. We've been over at your place that like past three three or four episodes, and I actually have really liked it because it's a nice pick me up to bike over to your place

in the in the cool night air. But I've been biking a lot lately, so I'm actually glad to not be on the bike today. See. I like doing it at your house because when I get bored looking at your face I can look at your great Dane in the corner there and just yeah, she's she's a good dog. She's sweet. But yeah, you so you brought over a beer oak aged vanilla worldwide stout yep from dog fish Head Doctor's Head, and they're freaking awesome and big thanks to my friend Ryan. Yeah he he hooked you up.

Yeah he. His wife is from Delaware, and so when he goes up there every once in a while, which that's where doctor Shed is, and he picks up some good beers, and super kind of him to uh to donate these uh, these beers to the podcast. And this one weighs in at a super stout seventeen and a half percent. Yeah, so if we start, I'm excited that we each have our own, our own twelve ounces of beer of this mom also a little worried by the

time we get to the end of the podcast. I was gonna say, yeah, it fights ourselves a little bit if at the end of the podcast we're slurring our words as we deliver our final thought. That is I mean, that's bigger than a lot of wines. Right, I don't drink a ton of wine, but isn't wine like around fifteen Yeah, exactly, it's beastly. Are you gonna crack these open? Let's crack it? Mm hmmm, gonna be honest, as soon as you crack it, you get like a boozy waft

through the air. It just smells like dark, dark beer. And if I were to start a rock and roll band, I call it boozy Waft. Hey man, you're going to the Boozy Waft show tonight. Yeah. Those guys are awesome. They do all justin Bieber covers. Right, I thought I was the only fan. You know them too? So this poores pitch black, nice caramel brown head. Oh man, it smells sweet too, which makes me very excited. Yeah, it's dark as night and I just had my first ship.

It's lovely. It's lovely, It's wow. The oak and the vanilla come through super nicely, and the base stout is just kind of that perfect level. It's not overly viscous. And some of these like bigger stouts, they're like you almost have to choose them because they're so big and burly. That's a nice body for for such a big beer. I was expecting it to be a little superhier. Yeah, this one's this one slides down nice and uh, really

really beautiful. Yeah. I mean, look at the carbonation for for such a big stout like this, I'm actually surprised at the amount of carbonation I've got coming up. Yeah. Sometimes these beers like this poor with almost zero had like no carbonation, and so you're just like literally feels like, um, it looks like old oil, it looks like motor oil, and it kind of has that feel in your mouth to this one does not. It's got a kind of a nice lively jump. Dude. I'm really glad you brought

this over too, because it's been pretty cold lately. We've kind of had a cold streak here late in the spring, and you know, when it's cold outside, it's nice to have a big kind of warming beer like this because I can already feel it in my belly. Yeah, like a stout booze in my belly. I'm not really feeling stouts in July and August, but when it's you know, thirty five degrees outside, I'm all about it. Stouts and barley wines are two of my favorite winter style beers.

Um And actually one of our listeners wrote in and he had some questions about barley wines. So if you have questions about beer styles or you just want to talk more about it, I feel free to join our Facebook group or email us. But our Facebook group is the perfect place to ask questions and kind of engage on topics related to beer and money. Um. But bar wines and stouts two of my favorites to drink during the cold months. So thanks to Ryan for donating these

beers to the podcast. Dude, it's awesome. I really appreciate it. Uh. And on that note, Matt, let's get into how to improve your credit score. So the credit score, let's first talk about actually what that is, right, Yeah, So it's yeah, it's important to note the definitions and a credit score. It feels like the super secretive thing. And for years and years and years, it kind of was secretive. It

was really hard to get your credit score. Back before the Internet, people didn't know what made up a credit score, right, Yeah, they didn't know what made it up, and they didn't really have access to it. And that's changed over the years. I mean I even remember ten years ago, I used to bank with a bank called Washington Mutual that is now difficult. Yeah, I remember them, and they one of their parks was we'll give you access to your credit score,

and nobody else was doing that. And I was like super pump because I'm a nerd and I wanted to know about it, um and so that was really fun for me, Like, I want to see that stats. And uh, fortunately now we live in an age where you have access to it and will tell you kind of how that works later on and where to go to get that um. But essentially, a credit score is a tool that financial institutions use in order to decide whether they should lend you money or not, and typically is referred

to as as the FICO score f I CEO. There's three main players that you've heard of, and all those kind of play into they're all weighted and create your FICO score. But experience TransUnion and Equifax, the ladder of which had a huge UH data breach last year and stunk it up bags Yeah, good jog bays. This episode is brought to you by Equifax. Yeah. And the other thing is too, is there are are a lot of different credit scores out there. There's different algorithms, Different companies

have their own sort of proprietary scores. They're all roughly the same. They all typically have UH fall sort of within the range of like three hundred or three fifty to up to fifty and some go up to nine. Yeah, there's there's they're all sort of different, but they all operate around the sort of the same principles. And that's

what we're gonna be talking about today. And so yeah, you might get UH one credit score from one place and one credit score from another place, and they're gonna be a little bit different, and you're like, well, what's

going on? Uh? And it's just because these different credit bureaus have their, like Matt said, their own algorithms, and they are essentially waiting things slightly differently but there are a ton of principles that you can lean in in, uh, in order to help you understand how to how your credit score is made up and therefore how to make your credit score great. So, like we said, your credit score is how financial institutions are going to decide whether

to lend you money. So good credit score means more favorable interest rates. It means yes, you're going to get that long and I mean that's why this is important is because this affects how much you're paying an interest based on the right that the bank or whatever financial institution you're working with is going to give you back. In old school human society, a credit score was essentially

knowing somebody and knowing their trustworthiness. And now, because like there's three million people in this country, you have to have a score assigned to you because you walk into your local bank and they don't know, you know, Matt

all makes pays his bills or not. Uh, And that's why there's this score assigned to you to kind of let them know, oh, well, Matt's paid all these other bills on time and uh, and he's he seems to have used it well his credit Well, so you know what he's trustworthy and we can lend to him, whereas you know before in early human days, it's like that guy sleeps in really late and he was really contribute

to the meals at night. So he's saying, back then, I would not have gotten a good a good loan, but but maybe today I would exactly exactly what I'm trying to say, jerk. Why do you need a good credit score? Yeah, I mean so essentially, I mean, just like you're saying it, it establishes basically your financial reputation is maybe the best way to kind of describe it.

And it's not to be overlooked. I used to be huge into Dave Ramsey, maybe about ten years ago, and he used to call the FICO score the I Love Debt score, because this whole thing is obvious. You know, everybody knows get out of debt, that's the inside debt, that's his whole stick. And I was all about that. I was like, Oh, that's cool. I mean, I had a FICO score because I we'd always used I use

credit card since I was a teenager. But I didn't really care about my score until we started applying for loans to buy a house and then I realized, Oh, I'm glad I've got a pretty good credit score, because otherwise that would affect me negatively big time and the kind of loan that we could get, and especially as a self employee person, we don't have regular income, and so because of that, banks are super nervous when it comes to lending to someone like me. I've got a

very variable income and they do not like that. It's very hard to get alone when you're self employed, and because of that, having a good credit score is huge. Yeah, it means even more for you than it does for the average person that can kind of rely a little more on their paycheck history and they can say, listen, this is how much I have coming in every month and point to that. And granted they still need a decent credit score as well, but for you, the credit

score means even more. Yeah. When they're employed by g E, you know, the bank's like, okay, it'll be cool, Yeah, okay, you're you have written normal employment and steady employment for UH an employer that is going to be around for a while, and that that helps a lot. But like you alluded to as well, Matt, this credit score has actually spidered its way into almost every element of life. So essentially your credit score will affect your loan rate.

So you apply for a mortgage, a car loan, anything like that credit card, you're that makes sense, Yeah, you're right,

that makes sense. It's gonna affect that you. You know, if you have a credit score of seven eighty, you're going to essentially probably get the best mortgage rate possible, which might be let's say four percent, and someone with much lower credit score six twenty might essentially be paying four point seven five, like a huge gap, which it would have have a point or full point onto a prime which could cost you dollars over the life of

loan over thirty years. So that's easily it's a huge factor, right, So you want to make sure that your credit scores buttoned up for things like that. Also renting a home, So if you haven't bought a home, if you're not interested in buying home, and you're a renter, your perspective,

landlord is probably likely should be checking your credit. As we talked about in our Laura Investment Property episode Investment Property Basics, we touched on it then, uh and even now though, would you consider running though two two renters that have kind of low or like a bad with with bad credit. Yeah, I totally would if they check out in some of the other ways that I do tenant screening, And eventually we'll do a whole podcast on tenant screening, because that's what I want to do a

big thing too. But yeah, essentially I would, but they'd have to meet some other parameters and probably provide a bigger security deposit so that you know, I'm ensured essentially in that way. And so yeah, just be ready for that. If you're running home if you have a low credit score, you might especially be paying a larger security deposit, and some landlords might turn you away altogether just because you

have a bad credit score rating. Yeah. And and then I saw too how different companies and even employers are taking your credit score and account when it comes to like getting a job. Man, I didn't actually even realize this until recently. Um, but employers are literally checking your credit score when they're I mean when in the hiring process, which seems really weird. In some jobs, it makes sense, like if you are handling a lot of money or

could be. I guess essentially the way it started off with certain employers said, you know, what this person needs to have good credit and good financial standing because they can be subject to blackmail and they're handling company funds, they might be forced into using company funds to cover

up for some of their financial indiscretions. And so that was why it started, but it's really breached out into other areas of hiring and people are having to give their credit scores for jobs that really they shouldn't have to be giving their Yeah, letting their employer to know their credit score for yeah, to me, that just seems

really weird. I totally get it. I guess in some financial institutions that you know, if you're like getting for a major stockbroker or something like, yeah, exactly exactly, But what does the credit score have anything to do with, say, like like a doctor, or like a hospital hiring a doctor, or a lot of positions where money just really isn't that important when it comes to how well they can

do their job. Honestly, a big reason that you were maybe even able to get that job, they had to, say, finance their student loans and you know, things like that, and maybe they're a little bit behind and they're not doing the the different programs that are offered out there. Yeah, I think it should be out of bound. Kind of weird for for most employers, and and obviously for some employers in some positions that should be waived. But yeah,

I agree with you. I think it's it's kind of messed up that it's that much a part of the hiring process more and more. And another way that we think is kind of messed up that your credit scores used is in setting your insurance rates, and so your insurance premium him are going to be based sometimes in large part, based on your credit score. We're talking like health insurance, life insurance, car insurance, car insurance, and home

insurance most especially. Yeah, and so so some studies have shown that someone with a great credit score and a d u I on the record will get a better insurance rate than someone with really poor credit but no d u I, no bad driving record. And that's for car insurance, for car insurance. It seems so backwards, dude. Yeah, man, So that's how far the credit score has gone into our society. It means so much, and it goes everywhere.

It affects you know, whether you can get a job, and your insurance premiums, and it's crazy, whether you can run a home, and how much you're gonna pay on your mortgage if you buy a home, and so it's so far reaching that that's the importance behind having a good credit score. Yeah, I mean like it, like it or not. Basically, it's becoming something that you need to pay attention to. Even if say you buy homes in

cash and you're just kind of flush. It's something that you need to consider because it does affect a lot of aspects of your life. Yeah, if you are like Richard Branson, rich you probably don't need to worry about your credit score, but otherwise you need to know. And one last thing randomly, I read this story recently that having bad credit can actually hurt you when it comes to you dating. So, Matt, we don't have to worry

about this because we're married. But if you're out there and you're still flipping through tender trying to find a significant other, or is there a field like on tender where you like, you like enter ear and enter in your age and then after that, like your credit score, don't I don't know. I'm happily married, so I haven't been on tender yet, but uh, you know, I don't

think so. But it was interesting that most people said, because again, you know, we we we talked about how it's kind of this indicating factor, the credit score of your trustworthiness, and so people when they're dating someone else, they were asked the question, you know, would you date someone with an awful credit score? And most people were like, no way, and essentially saying that I don't really trust

people that have a terribly low credit right, it's so crazy. Yeah, what it's thaying is that in the same way that businesses and insurance companies are sort of screening people, I mean, I guess, uh, folks that are out in the dating pool were doing the same thing. And that's interesting. I mean, looking back, it's weird to that long long time ago.

You know, when we were dating people. If someone would come up to me and you know, introduce themselves and they seem really nice or whatever, but they were like, my credit score is probably would have been like, okay,

you know what I mean, you're a total nerd so too. Yeah, but I didn't assume most of what that was back then, Whereas I feel like I had an idea of what makes up your credit score and like what it means but in general, I feel like a lot more has kind of come out recently about your credit score and what and what it means for you than it did back then. Yeah, for sure. Like like we said at the beginning, I mean think in the last ten years, a lot of change when it comes to credit scores.

There's a lot more transparency, and we're we have easy access toward scores. The world has changed a lot in the last ten years. Drill Apparently I was cryogenically frozen, so I missed some of it. You and Harrison Ford exactly. So yeah, if you are in the dating world, pick up your credit score so you can pick up more of the opposite gender. So next we're gonna talk about basically how to improve your credit score, how to get a higher credit score, what you can steps you can

take that can improve that. And by doing that, we're gonna be explaining the makeup of what what you know, what goes into a credit score. So we're gonna talk about the things that the different companies take into account when they're creating your credit score, and we're also gonna talk about how to improve those things. And the number one thing, and it's weighted averages essentially that they that they factor in. So the number one thing that credit

scoring companies are looking at is your payment history. Yeah, of course, duh right. So what that means is that if you have payments on a credit card or a car loan or student loans even as well, Uh, you need to be paying on time or early. That's how you're going to keep these different companies happy. Uh, And that's how you're going to make sure your payment history is is in the clear. And this becomes especially bad.

If you're you know, a few days late, it's not the big of a deal, or even thirty days later it might be a small ding. But if you get to ninety days late and get essentially delinquent on a credit card payment or on a bill payment, uh, that can it's really bad. That can really hurt your credit in a big way. And if you have a few of those on there, that can stay on your credit score for seven years and can we really put a

hurting on you. You start getting out to ninety days out to eight days, six months, and different companies will start it's just I mean, they call it a charge off and basically they consider your debt or your you know, your payment uncollectable because they're like, well they haven't paid, they're probably not going to pay, and that really really negatively affects your your credit score. And like we said earlier, your payment history, paying on time or paying early makes

up of your credit score. So that is hugely important and matt Essentially, the time frame that you need to know that could have impact your credit score is the thirty day mark, in the ninety day mark. And while some institutions that you have credit through won't report anything until it h's sixty days late, be cognizant that most will at thirty days ding a mark on your credit score. It could drop your score by a hundred and ten points that one mark, And so if you're thirty days late,

that could be a big problem. Let's say you're shopping for a house or a car and you're just about to get alone and your your credit score drops a hundred and ten points. That could severely impact first whether you can even get the loan, and second the rate you're gonna pay. Yeah, you may not even qualify for that at all. Yeah, So your payment history is huge. It's the number one factor. Uh, thirty days late is really important to avoid and ninety days later is the

most important to avoid. And like we said, that can stay on your credit report for up to seven years, so it can hurt you for a long long time. Further, it gets away from being marked up on your credit report like a few a few years later. Yeah, the better you are, it'll lesson the sting, will lessen fade. Yeah, but it will be there and people will see it and it will continue to hurt the actual score. And so you want to make sure you're paying your bills

and your debts on time. So the next piece of the pie, the next biggest factor that goes into your credit score is the amount you oh or like most oftentimes too is referred to as your utilization, right, So this is where your limits come into play. Let's say you have a credit card with a five thousand dollar limit and you are using four thousand dollars of that

limit every month. You're charging four thousand. Even if you pay it off every every month in full, you're still getting bingked because you're using a high level of your available credit. So if you have a five thousand dollar limit on your card and you are using five hundred dollars every month and paying it off in full. Yeah, that's more like it. That is going to be the sweet spot in significantly help your credit score because you're

only utilizing a small amount of your available credit. And this credit utilization factor is a full thirty of what influences your credit score. So combine the credit utilization with your payment history, that makes up almost two thirds of your score. So these are the biggest two factors that play into having a high credit score. You know, you touched on some of the percentages there, but some other percentages too. Is that like you said five for five thousand.

You said that because that gets us to that is the magical number. Yeah, that's that's kind of a key, a key percentage right there. A lot of folks will say, and that's definitely great, that's that's safe. Being below thirty is like getting a be on a paper. Yeah, being at ten per center below is like getting a plus. Yeah.

Different experts are now saying that essentially the lower you can get it, the better because creditors they want to see that like, yes, you qualify for that loan or that credit card, but you're not really using it because you don't really need it. Your fancy and essentially that it seems that the lower you can you can get it,

the better. There are no like sort of hard fast rules because again all these different companies have different formulas and sort of different algorithms that go into creating your credit score. But that is pretty clear that the lower

you can keep your credit utilization rate the better. Yeah, and they're kind of secretive sometimes about exactly what comprises, uh some of the specifics on these right, so that FICO is not coming out and saying and experience not coming out and saying this is exactly the percentage you

should stay under to have the maximum score. So some of these things are people know from kind of experience and looking at their own scores and studies that have been done about credit scores and some of the things that the actual credit bureaus have put out themselves as well. We have a really good understanding, but we don't have a perfect understanding that we can say these are the

hard and fast rules. But from what we've experienced and seen and read, under ten percent credit utilization is going to be the sweet spot for you. So it's hit then as a way to be able to keep your your utilization rate lower is check in with your credit card and see if you can up your limit, if you kind of find yourself consistently, you know, pushing that tin and even even more so that see if you can increase your limit, and essentially you're utilizing less of

the credit that you're allowed to use. And I will say that works and a lot of time if you're handling your credit well. But sometimes if you reach out to your credit card company and ask her a higher limit while showing that you haven't handled credit very well in the past, they might get a little worried. Yeah, we won't want to look as good. Yeah, it will

affect your credit temporarily. It's weird because you need to be able to do those things in order to increase your limit, but at the same time, every time you do that, it affects your credit score negatively. I like to think of it almost as like you're opening the fridge or like the freezer. It's like you got to open it and see what's in there. It's sort of like when you're kind of checking your credit score, and it's going to kind of the lower the temperature a

little bit every time you do that. But like that's what's necessary to get what you need out of the fridge um and then that's a good way to it, and then long term you'll be able to kind of build from there. Yeah. So if you're handling your credit pretty well, it's more than reasonable to reach out to one of your credit card companies and say, hey, it's just wondering if I could get a five thousand dollar limit increase, and if they grant that to you, that

will definitely help your utilization rate. Just make sure that once you get that increase in limit, that doesn't increase your spending. Yeah. Just so those are the first two factors that go into the makeup of your credit score. What's the next one? The age of credit and the length of your credit history. So this makes that fift of your credit score, and essentially your creditors and the financial institutions they want to see that you've had a

long history of paying your bills. So you eight year olds out there, you better be crushing it on this. Okay, there swollen on their history, Yeah they are, and on the shuffle board. Yeah, I mean this one is it's pretty simple. Essentially, the longer you've had accounts open where you've paid on time and kind of kept up with it, the better is gonna look. Um, when's when's the first time you got a credit card? Remember when you when

your first credit card was? Gosh, I want to say it was almost towards the end of college, okay, which was probably good for me. I didn't know a whole lot about money. I knew I was cheap, but I didn't really know how to handle money at that point. And so if I had gotten a credit card, I don't think I would have bought crazy stuff, but I wouldn't have known how to utilize credit well at the

age of like eighteen or nineteen. Yeah, it was twenty because when I look at you, and we'll talk about later how you can kind of look at some of the details about your credit and some great resources to use. But when I look at one of those resources, credit Carma, it essentially tells me how long my credit history is, and it's fourteen years. So I was twenty years old when I got my first credit card. Nice man. Yeah, I remember getting mine, and I think I had just

got my driver's license. But there's there's rules now as far as what credit cards and what different companies are able to offer teenagers. Do you know what those laws are because I don't Yeah, you're not able to offer people under the age of eighteen, Okay, that's credit cards anymore. And so the sweet spot for you to get a get a credit card, to sign up and you know, if we have people listening who are aged eighteen to twenty two and are in college, that's the time to

get credit and use it wisely. You start using it wisely because once you get out of college, if you don't have any credit history, it's tough. It's tough to get a credit card, and it's tough to get started. They're really willing to offer you credit if you're in college as a student, or if you're you're just doing that general age range, it's easier, but once you get out of that, it's it becomes a lot harder to get credit and established credit. So you're gonna want to

make sure you start it. Then. Yeah, they say, oh, you're twenty three or twenty four, I see you have a job. How come you've never had a credit card. And it's sort of like this sort of catch twenty two thing where you need to have credit to get credit, but you should have a job before you start racking up credit. Card debt. So if you're in college and you get a credit card, really like buy your gas with the credit card or something and pay that off

every month. But don't don't start willy nilly using it all over the place. Be smart. And one other really important thing to mention about the age of credit length of credit history factor is people ask the question all the time like should I close this credit card, And the answer is almost always no, because this is an important part of your credit score, and if you close

that card, it is essentially you are hurting. First, your credit utilization basically brings down the total amount of credit that you have been offered, right, So just increasing your basically increasing your credit utilization rate. Yeah, and it also then if you've had that credit card for a number of years, it takes away from that that's been building to this, adding to your length of history. So just put it in a drawer somewhere or use it once

a year to kind of keep it mildly active. But don't get rid of it altogether because if you do that, you're gonna actually hurt your credit score. Unless you have a credit card that has an annual fee. So if you've got a like an annual fee on a card that's just sitting around and you're not used it. Please don't keep that around. Yeah, it'll it'll definitely doing your

credit to close it. But don't be so afraid to close an account, uh that you're going to keep this card sitting around that you're not using, that you're paying every year on because they've got a stupid annual fee. Uh, just because you don't want to hurt your credit. Yeah, let's ding it a little bit, but it'll recover, it'll be fine. Yeah. And let's say you're not shopping for a car a mortgage in the next six months. Yes, uh, then you can close a card like with an annual fee.

That's when you can do it. If you're in the middle of shopping for something. Don't make any changes to your credit, no big changes, no big changes. But if you don't have anything that you're shopping for, go ahead, close that card with the annual fee. Save the ninety five dollars a year. You might, you know, drop twenty pots in your credit score, but that will recover over the next quick six months and be back close to normal.

So then the next one, man is the type of credit that you have or like they basically your your credit mix um. And so what we mean by that is that creditors want to see that you have a nice sort of portfolio essentially of credit that you've been offered. Creditors want to see that you've got like you know, like a mortgage, a car loan, credit card, student loans, like all these different kinds of credit that you cant imply for. It's just, I know, explaining this and thinking

through it, it is super weird. They're saying, you have all this credit available to you, but don't use very much of it. Have a whole equity line and a mortgage in a credit card and blah blah blah blah blah, but use like an incredibly infinitessimal amount of that credit that is available to you. It's super weird. But this is the way the credit scoring system works, how it's made up. And you've got to play the game because you really is like a game, isn't it. It's like

a game. It's like a game, and you want the lowest rates, and so you've got to play this game, uh, to get it right so that you're saving the most money. Yeah, And that being said, this only makes up of your score. So don't get a car loan just because you're thinking like, oh, I want to get my credit score up, I want to get my credit scoring by the car and get a loan. Yeah, please do not do that. This is

only ten percent. So we're kind of getting down to the bottom of the list now where these things aren't you know, having nearly as much of an effect on your credit score. It still has an impact, but you know, nothing close to like your payment history or your utilization rate. But if you do find find yourself having you know, very few lines of credit, you know what, consider opening up another credit card or two that don't have an annual fee so that you know you're not gonna be

angry every year when you get that bill in the mail. Uh, and take out those credit lines and just you know, barely use them and pay them off. And so having those extra lines of credit can help this ten percent factor, and then over time can actually go to helping your length of credit history as well. So it can kind of have this like double whammy effect or triple wammy essentially because it's helping your credit utilization at the same time.

All right, Matt, in the last factor, we're getting to the bottom here is hard inquiries for new credit account for ten percent of that piece of the pie when it comes to your credit score. Yeah, basically, what would mean by that is shopping for new credit. So whether that means trying to get an Alan, uh, new car loans so maybe a home equity loan. Maybe that means kind of applying for a new credit card. These are

all hard inquiries on your credit. And what we mean by that is an example of a soft inquiry is you checking your credit score. Um, that's something that will not affect your credit score long term and uh, and you can do that, that's fine. However, applying for new credit hard inquiry, and that will drop your credit temporarily. It's not like a huge thing. Again, we're towards the bottom of the list here and this is only but keep that in mind. You don't want to just kind

of constantly shot for new credit cards. That being said, in the past, I was looking before preparing for this podcast, and I've got seven hard inquiries on what you're shopping for. Man, So if you guys don't already know this, I'm a super nerd and what that means is that I'm constantly working the credit cards, the sign up bonuses, and there's some sick bonuses out and you just took advantage of a really great one. We're gonna do it an entire episode.

I think on on work in the credit card system, I think, but I'm a big fan of doing that. Essentially, every three months, I try to get into credit card with like anywhere between a three to eight hundred dollar sign up bonus, as long as you spend a certain

amount within you know, typically three months. So that's why that's why I've got a solid seven hard inquiries, which is it kind of surprised me when I saw it, but every one of those I was like, oh, yeah, that's me when yeah, the last one you signed up for was an eight hundred dollar bonus. Yeah yeah, that was a That was the business card which I was able to open through my photography company. But I mean I used it for for photography expenses and and I

got I got that hundred dollars. Yes, Essentially, watch out when you're applying for credit. Just make sure you're not applying for credit all over the place. But one caveat is that if you're applying for a mortgage or car loan, usually if you're applying within a two week period for mortgages and you're you know, essentially shopping with a few different lenders, and same thing if you're buying a car, you're shopping with a few different lenders, your credit union,

a bank, trying to get alone. If it's within that two week period, they will count it as one hard inquiry. So don't be worried about that. Make sure you're shopping around for your mortgage or car loans. That's way, that's great. Yeah, that's way more important than you know, feeling like you're, oh, I'm gonna doing my credit Like who cares? Your credit will recover. It's like constantly as long as you're as long as you're paying, you know, paying it off, like

doing the big things, it will recover. And what's more important, way more important, I think is is shopping around and making sure you're getting a competitive rate, finding a lender that's not gonna really hit you with a ton of ridiculous closing costs. Yeah, so shop hard, shop around, but but do it inside of two weeks so that you can limit that exposure to your credit score. So those are the essentially those are the five biggest things that

weigh into your credit score. Right, So I'll run down real quick payment history, your credit utilization, your age of credit, length of credit history, types of credit in your credit mix, and hard inquiries for new credit, and we will essentially put that pie chart in the show notes on our website. Yeah, those are all good things to keep in mind. Yeah,

so you can check it out. It's really really helpful just to kind of visualize it and think through it when you're considering your credit score and how to make it better. So we're talking about what makes up, you know, your credit score, let's actually talk about how you can find your your credit score. Sure. So, Yeah, there's a couple of websites that I prefer to use and that I think are really the best out there for keeping track of your credit score, for tools that can kind

of help you kind of stay on top of it. Um, my favorite is discovers tool Discover Who is a credit card Company's my favorite? Yeah, it's how you're gonna say one of the other one. It's awesome, Man, I just love that one because it's really simple. It's called credit scorecard dot com. You know a lot of the other credit cards are doing it. Nouncing like a max and

uh capital one. Yeah, so essentially do now almost Yeah, like I said ten years ago Washington Mutual, it was like this like lone Ranger giving people their credit scores, and now you can get your credit score from almost any credit card that you have. Um, I just like, you know, I'm really weird about how things look, and the simplicity of things and and discovers website makes it really easy to find out exactly what I want to know. Like the line graph where it kind of like tracks

it across. I like that, and I just I just like the simplicity of not being like marauded by pop ups and stuff like that, and so just nice and clean. You know what, I put in my information and I see my credit score and I move on. There's a lot of websites out there too that that will say that they'll give you your credit score for free too, that are legitimately free. Our credit Sesame and credit Carma. Yeah,

those are grave views of those. I actually personally I have not used that as they're both fantastic sites and they're free, and essentially they work kind of like Mint does. If you use Mint as a budgeting or tracking tool. For your money. Uh, and there, you know, occasionally trying to sell you a credit card or trying to um get you to refinance your loan into something with you know,

one of their advertisers. But they will give you access to your credit score from two of the bureaus, and they give you a really good idea of the categories in what you're doing well and when it comes to credit and the categories what you're doing poorly. So they'll they might tell you, for instance, hey, you know what credit card utilization, you're kind of a yellow on this like green yellow, red scale, and when it comes to hard inquiries, you're red right now. So they kind of

help you understand. They break it down to to how it's weighted, which is really nice. Yeah. So these weights that we just told you about, you know, they're actually kind of telling you here's exactly where you fall under those weights and kind of how you can attack fixing them. Yeah. So in the show notes, we'll we'll put some links

on there as well. It's some of the websites, there's a lot of and I say that earlier to a lot of the websites, they'll give you like a free trial and if you don't cancel it, you'll start getting charged. And so we'll put the links on there for some of the actual free websites where you can get your credit score and keep up with it. Yeah. So now let's get to a question that a listener posted, uh in our Facebook group. He wrote it all out and

I'm just gonna paraphrase it. Essentially that what he's saying is that they had some long term, kind of long standing credit card debt and he opened up two or actually three new credit cards that had a zero percent interest for like one or two years, and so they're paying off their old credit card with those, and he was wondering why his essentially their credit got dropped pretty significantly, uh when when they did that. And this is where

he's confused. It is because he was thinking, well, we increased the amount of credit that you know is offered to us, so therefore our utilization rate hasn't changed. But what he also said was that those new cards, he maxed them out, and I think that's where the problem was. Yeah, so, uh, something we didn't necessarily tackle earlier on when we talked about credit utilization. There's always been this debate about whether it is overall utilization. So let's say you have five

credit cards. Is it of your overall credit cards or is it ten percent of each credit card. So let's say you've got five thousand dollars on a five thousand dollar card and nothing on the rest. Well, that five thousand dollars that you have out against that five thousand dollar card is actually gonna digging your credit in a pretty big way. It's going to negatively affect your utilization. It would be so much better if you had one thousand dollars out against all five credit cards, so five

thousand dollars spread out evenly against all the cards. Yeah, yeah, And again, this is something that's kind of it's it's it's just kind of fuzzy, right, Like it's something that's kind of constantly changing. I don't think this used to be the case, but a lot of the experts now are saying that it's not sort of this aggregate amount of credit that you're offered and you need to stay overall underneath and even you know, ten percent is even better.

It seems now that what experts are saying is that we're looking at per card and so trying not to exceed ten percent but definitely, you know, no more than thirty per card. So if your maxim ount a card, even though your total credit utilization hasn't changed, that's gonna hurt your score. Yeah, and I will say I actually kind of experienced this recently. I, um had to buy some things for work and get them reimbursed and so

on this card that I have a limit on. I normally charge you know, probably like two thousand dollars a month and a yes, so right at ten percent and then uh, but I actually had to up it to like almost I think probably just over six grand in a recent month, and my credit score dropped probably like ten to thirteen points something like that. And so I

kind of saw that firsthand. It wasn't even like massive, right, I wasn't using you know, nineteen thousand dollars out of the twenty, but even just bumping it up, the credit score just adjusted a little bit just based on that, and I was kind of surprised. Um. So, yeah, those individual credit cards and your credit utilization on each card matters,

and you need to pay attention to that. Yeah, and we also touched on this earlier too, But every time you have a new inquiry for new credit basically, so when you every time you apply for a new credit card, that's a hard inquiry, and that again makes up ten percent of your total credit score. So every time you opened up one of those, your credit your credit score dropped. And that's something and with those being hard inquiries, that's something that's gonna take, I mean a while for that

to rebound. I mean probably talking six months to a year of you know, paying again early or on time before you're gonna kind of see that creep back up to where you were before. Yeah. Unfortunately, the hard inquiries are only ten percent in your credit mix, and they only have the most lasting impact for the first six months to a year, and so um, that won't last forever.

And if you can essentially kind of start to spread that money out on your of your credit card debt between other cards as opposed to maxing out two of them, um, that will really dramatically impact the health of your credit score. So consider those two things and read. Thanks for the question, all right, Matt. Back to the beer dog fish Head oak aged Vanilla worldwide stout. I am loving this man. This is completely in my wheel house, loving it. Clearly,

Jill's feeling that seventeen and a half percent. So the reason I like it is that it's a big beer. It's seventeen and a half percent, But it doesn't drink heavy and thick. As I'm drinking it, it feels pretty light and delicious. It's definitely sweet and kind of has like that caramel e like molasses. Uh for sure. It just tastes really roasted dark molasses, just all the good things that I like. But it doesn't it doesn't sit heavy. I'm not feeling you know, I'll full up with it.

So Yeah, sometimes I avoid vanilla beers because vanilla can be just such like an overwhelming component. Totally chill on this. It's perfectly chill. Love it. It's got like just the nice vanilla notes. And I'll say too, I really like the balance of how sweet it is, Like it's it's somewhat sweet with like a nice boozy nous. So like what you said at the very beginning of the podcast was that it kind of warms you up inside, and it's totally doing that right. It's got that boozy nous

quality that like warms your inerts. It's pretty awesome. Yeah, even though it's March, I'll still call this a winter warmer, and uh enjoy it. This is like the perfect beer for tonight. Man. It's thirty degrees outside right now, and I'm happy to be drinking this, no doubt. So thanks again to Ryan for the beer, and thanks buddy to dog fish Head for taking all the time to make a beer this awesome. Yeah, dog fish Head, man, they've

been around forever. They have. Yeah, they're one of like the old school craft craft beer guys, not like Sam Adams old school, but like, you know, a couple of years after after Sam Adams, dog fish has been around. They're like one of the one of the first names I feel like I remember seeing out there. They're one of my favorite of the nationwide American craft breweries because

his hand like, they make some awesome beers. And I could nerd out right now and go off for like ten minutes telling you all the beers I love from a dog fish Head. But we're not gonna. We gotta wrap up, all right. So essentially the takeaways you need to know on how to improve your credit score are First, you need to know what a credit score is, and it's the tool that financial institutions use to decide whether

or not to lend you money. More and more, it's becoming important, So make sure you're kind of paying attention to this. You hear it all the time. It's time for you to to look yours up. Why you need good credit. It influences the rates you're gonna pay on mortgages, car loans, credit cards. It influences whether or not you'll be able to rent a home, and possibly whether you'll

be able to get a job. So the steps you can take to improve your credit score, there's five main factors, five things that kind of way into your credit score. The first and largest one being your payment history. Make sure you're paying on time or early. Uh. That's going to have the biggest impact on the makeup of your credit score. Your credit utilization. It makes up thirty percent

of your score. And make sure that each card you're charging less than thirty percent of the overall available credit every month. And you know what, if you can do even better than that, it's gonna help your score even more. The next thing is the length of your credit history, especially if you're younger, you're in college and you don't have a credit card, Go ahead and do that now, know yourself so that you're not going to get yourself into a bunch of credit card debt, But go ahead

and get that card. Like Joel said earlier, maybe just start putting your gas on there so you don't have to walk inside of the gas station. Just make that happen in the pump and pay it off every month. Start building up that financial rep reputation, and that's gonna you're gonna thank yourself down the red. And if you're seventy years old, do not close your credit card you open up when you were twenty, because that's helping you. Right. So also, the types of credit that you're using makes

up ten percent of your credit score. Make sure you have a wide variety of different credit available to you. Make sure to use it wisely, but have that variety available. And then lastly, again this is one of the smaller ones. So the one Joel just mentioned was ten percent. Uh, this one is also only ten percent. But hard inquiries for new credit every time you apply for say a new credit card or start shopping for a loan, those are gonna come in at hard inquiries and those are

gonna doing your credit a little more. The beautiful thing. Also, there are great tools on the web for you to use to help you understand your credit better and to know your credit score in mere seconds. So we recommend credit scorecard dot Com, a tool from Discover credit Sesame, and credit Karma. Those are three great websites that won't charge you a dollar which will help you understand and know your credit score. We haven't actually talked about our

credit scores. Let's dive old you wanna like share? Are you prepared to to kind of dive into that? Do you know yours off the top of your head, because you probably do. Actually had to look mine up. I had to look mine up. Well, I looked mine up today. I'm not so religious about my credit score that I could probably tell you on a day by day basis, but I do tend to look at it, you know, once every two months, and I looked it up today in preparation for this podcast on credit scorecard dot Com.

And I will tell you after you reveal yours to me. All right, So even with my seven hard inquiries, so don't be like me, don't apply for seven new credit cards in the previous twelve months. But I was. I got above eight hundred, man, I was that like like eight o four eight five, I think nicely. It wasn't like right at eight there was like a little a little bit up there what you got. We'll keep working hard and maybe at some point punk you can to

the amazing level of eight oh nine like me. So yeah, like five points sire than me. Yeah, I'm gonna hold that over you for a long time. I'm gonna hold it over your head. Here's the thing that, as much as we kind of like to joke about that, it's not the end. I'll be all. Uh. Some of the best credit cards out there that are offerings for me that I like to go after, which are the sweet

sign up bonuses. They are looking for people that have high credit score, and typically that range starts at seven hundred. And that's what's so crazy is that you can get an amazing card with a sweet sweet sign up bonus easily five bucks. If you're you know, around seven and up, you're golden and real quickly. Three credit score numbers you should keep in mind because they are kind of essentially barriers,

uh in good good markers for you. Six eighty, seven forty and seven seventy, so six eighty kind of like transitions you into like you know, what, this person is pretty trustworthy and go with their credit once you're above that number. Seven forty is like, man, this person's killing it and they have access to any sort of credit whenever they want. Seven seventy is like, you have access to any sort of credit, but also at the most

preferred rates. So I've been in the seven sixties at sometimes and it's great, but you kind of miss out on some of the slightly better rates if you're going for a whole equity line or a mortgage rate. Thanks so much for listening to everyone. We really appreciate it. You guys are the best and the ladies. Be sure to check out how to money dot com. We'll have show notices up there, including some of the sites we

talked about in this episode. And if you like what you hear, let us know and please review and subscribe on Apple Podcasts or wherever you listen to podcasts, because it really helps us spread the love with other people. It's kind of the currency online for podcasts, so it's true. If you'll like, just tell us a five star, four star, one star. If you hate us up real quick and let people know, don't give us a one star. Don't do it. Please, you hurt our feelings, but seriously, thanks

for listening. We appreciate it and we'll be back next week. Best friends out, Best friends Out,