Demystifying the Credit Score – EP 160

Lions and tigers and credit scores; oh my! With so many components and antiquated information it’s no wonder there is so much mystery surrounding the credit score! While there are a handful of factors that go into a credit score, it’s not as unattainable to understand as one may think. Join us as we take a look at this important financial reality and become equipped to take ownership of our own credit scores!

Sponsors: 

  • Frugal Living: It’s another podcast sponsored by Brad’s Deals, one of the longest-running deal sites on the internet. It’s chock full of savings hacks, financial tips, and stories on how to live better for less. The podcast is hosted by Jim Markus, an editor at Brad’s Deals, and is available anywhere you listen to podcasts. So subscribe to join the conversation and learn something new about Frugal Living.
  •  Demystification: like when the wizard is revealed to be a regular human, or when you learned that no one *actually* looks that good, it’s just a filter. demystification…Making seemingly daunting things super manageable. Use code lions+tigers+bears to take 10% off the mystery and scariness of credit scores.

Notable Notes:

What the Internet has to say:

This article from Experian provides us with a list of the 5 factors that comprise a credit score and what we should consider when trying to improve our credit score.

What Jen+Jill have to say:

  • FICO Score: FICO stands for Fair, Isaac and Company, and they’re a data analytics company. FICO scores range from 300-850. A good FICO score technically starts at 670 but most people will say it actually starts at 700. An excellent score starts at 800. Once you hit 800 there’s no advantage to trying to get your score any higher. Most Americans have a good FICO score or better.
  • 5 Factors of CreditPayment history
    • Payment History
    • Credit usage
    • Length of credit history
    • Types of accounts
    • Credit history

More from the Internet:

This article from The Balance outlines ways to improve our credit score.

More from Jen + Jill:

  • Get a Copy of Your Credit Reports & Dispute Any Errors
    • AnnualCreditReport.com once a year and you can check regularly at Credit Karma.
    • If you find an inaccuracy you’ll have to dispute it at all major credit bureaus that you see the inaccuracy on: Experian, Equifax, & TransUnion.
    • Each bureau has a Dispute Center on its website so Google “Equifax dispute center” and you’ll find it.
    • Write a Goodwill Letter to get paid off delinquencies:
    • Leave Accounts Open
      • Credit length is important. Get a no annual fee card or secured credit card with no annual fee and keep it forever.
      • But only if there’s no annual fee
    • Get Professional Help
      • Don’t every pay someone to help you clean up your credit. There are plenty of non-profit credit counselors that offer debt management plans. This is a last resort
    • Avoid New Credit Card Purchases & Applying for New Credit Cards
      • 30% utilization is the max, not the goal. Pay off your credit card in full, every month, on the billing date.
    •  Pay Off Debt (payment history = 35% of credit score)
      • Never pay to increase your credit score. The point of a good credit score is to save you money on loans and credit card rewards so paying interest on revolving credit card debt does not make sense.
    • Be patient
      • Building credit is a long game. There are very few things you can do to build your credit fast and those still only raise you a few points.

BILL OF THE WEEK – 

Thank you Mary Kate for sharing your bill about your dad named Bill! It sounds like he gave you some great financial advice about paying off your bills! 

And thank you Carla for sharing your bill about getting paid for unused sick time!

If you want to submit your bill of the week visit frugalfriendspodcast.com/bill to leave us a bill

This bill is brought to us by Policy Genius, they make it easy to compare home & auto insurance in one place. They’ve saved shoppers up to $1,055 per year over what they were paying for home & auto insurance. Getting started is easy; head to Policygenius.com and answer a few quick questions about yourself and your property and Policygenius takes it from there. They’ll compare rates from America’s top insurers, from Progressive to Allstate, to find your lowest quotes. 

Lightning Round

 Our experience with credit:

  • Jen-  Experian Boost is free but it only works for Experian not the other 2 but when you sign up it will count your bills like your phone, utilities and streaming services toward payment history. 
  • Jill- Don’t pay off a loan within 6 months of buying a house. Because paying off a loan does lower your credit score for a bit of time which isn’t bad you just don’t want to do that right when you’re applying for a mortgage. Plus you’ll prob need that cash.

Wrap-Up:

Thanks so much for listening! Keep leaving us reviews on iTunes or Stitcher, and sending the screenshot to frugalfriendspodcast@gmail.com. AND share our most recent episode on social for a chance to win a copy of the Frugal Friends Workbook!

Thanks for listening! See you next week!

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