Credit Karma Vs. Everyone

Credit Karma Vs. Everyone

Your Credit Minute Show Notes:

  • 00:00                                   Hey, what’s up YouTubers, this is Nick Tsoukales with Key Credit Repair. Guys, today we’re going to talk about credit karma. The question I’m getting consistently is, “Why is my Credit Karma credit score, so much different from what the banks and lenders are using?” Everyone’s going after Credit Karma these days online. Every blog is talking about Credit Karma, it’s the free site, everyone’s using it, and we’re going to call this video Credit Karma Versus Everyone. Okay? So let’s break down why your Credit Karma score is different. And there really is a very specific reason why your Credit Karma score would be different than what the banks and lenders are using, and the main reason really is the scoring formula. So keep in mind, you have various different scoring formulas out there. Okay? The one I always talk about is going to be our good friend, Mr. FICO. Okay? The FICO score invented by Fair Isaac Company, that has always been the crème de la crème. That is the scoring formula that every bank and lender is using for pretty much everything.
  • 01:01                                   The latest version of FICO is FICO 9, produced in 2016. Um, it’s a scoring formula that banks and lenders really aren’t using, okay. Most mortgage lenders, for you guys trying a home loan are using FICO 4, FICO 5. It’s an older version, it’s got to be a good 20 years old. Uh, but FICO is what the banks and lenders are using. Okay? Now, and then obviously they have you know, FICO 8 and FICO 9, those are for educational purposes only. Keep in mind, there are a good five or six different recent versions of FICO that are used for different purposes as well, there’s the car lending score, the auto lending score, so on and so forth. But we’ve covered that before. Okay? Um, Credit Karma is not using FICO guys, it’s using something called Vantage. So your VantageScore, excuse my bad handwriting, so you’re wondering, what is the VantageScore?
  • 01:55                                   Well, a few years ago, the three, the three credit agencies, you have the big three. Experion, TransUnion and Equifax, okay, they got together and they actually created um, they formed a team and they created this new scoring formula called VantageScore. Okay? The reasons behind it, eh, you’ve got to wonder. I would say probably a big reason if I was in the scoring uh, business, would be to really bypass the licensing fees that they were paying to FICO every time they used FICOs algorithm, because essentially what they’re doing is they’re paying FICO a fee to use that scoring formula. So essentially what it is, they came up with their own formula. Okay? That formula is showing up on all types of websites. The first website that we really show AdvantageScore show up in, show up on, was a website called truecredit.com. For any of you that have been monitoring your credit for more than a decade, you probably remember TrueCredit. TrueCredit was TransUnion’s credit monitoring site and it was super-duper popular and pretty inexpensive. It might even still be up right now, but typically most people are accessing the TransUnion data directly through TransUnion.
  • 02:57                                   Now, when Credit Karma showed up to the party, they were offering a free credit scoring formula. They were doing it in conjunction with TransUnion, so they were offering the VantageScore pretty much automatically. Okay? Uh, they’ve now taken on Equifax as well, Equifax is also using the VantageScore through Credit Karma. Um, the one agency you don’t have on Credit Karma is Experion, which is okay, it is for educational purposes only, but again, there is going to be a difference between that FICO scoring formula and the uh, VantageScore. Okay? The main difference really, and I’m actually going to pull up these stats, is going to be payment history. Okay? So your FICO scoring formula is going to account for payment histories 35% of what makes up the credit score, whereas Credit Karma or VantageScore is going to take it into account as 40%. Okay? FICO score, you’re going to use 30% as a percentage, how they weigh debt, and VantageScore is going to use 21%. So even that is going to be slightly different. Okay? Also you have uh, total balances are broken down to 11%, recent behavior 5% um, and extremely low weight available credit 3%.
  • 04:04                                   So the way they do their algorithm is slight different. It’s not going to be a massive difference in most cases. Uh, VantageScore’s original formula was drastically different from what FICO was using. These days, it’s almost a perfect match. So if you’re using Credit Karma, okay, continue using it. It’s a good little system, it’s free of charge, so I’m a big proponent of free credit monitoring services. It allows you to be in tune with what’s going on in your credit at all times. But if you’re really serious about accessing any sort of financing in the next even six months, I would suggest you move your credit monitoring um, over to a paid site. I’m going to give you a couple of them that are really, really good. Okay?
  • 04:46                                   One of them is going to be myfico.com. Okay? Myfico.com is FICOs actual credit monitoring service. This the theirs guys, okay. It’s not cheap, though. The three-in-one uh, credit monitoring through myfico.com is somewhere in the vicinity of $30, $40, depending on which options you pick, so it is really pricey. But, when you access that report, aside from getting to credit monitoring and the alerts when you pull your credit report each month, you’re getting the data from all three bureaus, and you’re getting all the different versions of the FICO score. You’re getting the mortgage lending score, you’re getting auto lending, credit card borrowing um, all the good stuff, so you can really see the credit report the same way the banks and lenders can see the credit report, okay?
  • 05:33                                   Um, another really good site, and I’ll give you guys a quick link, is going to be smartcredit.com/keycredit. So we’ve been working with SmartCredit, really good credit monitoring site, super awesome tech, [inaudible 00:05:53] app, [inaudible 00:05:55] your credit, and you’re getting real-time alerts. The big benefit with our SmartCredit credit monitoring, is [inaudible 00:06:02] run your credit multiple times throughout the month, and it’s just a little cheaper than myfico, it’s about $25 versus the $39. Okay? So another great resource, keep in mind, we’re not offering FICO scores through this website, okay? We’re offering an educational purposes only credit plus score, where with myfico, you’re getting exactly what the banks and lenders are seeing. Okay guys?
  • 06:22                                   If you have any additional questions regarding Credit Karma versus your FICO scores um, how you should be pulling your credit or preparing your credit scores um, months ahead uh, from getting any mortgage lending, by all means give us a call. There should be, if you’re on Facebook, there should be a learn more button right below my finger here, click on that button, it’ll take you right to our website, you can give us a call and ask any questions. Thanks, guys.

 

Why are my scores different for the 3 credit bureaus?

Why Are My Three Credit Scores Different?

Your Credit Minute Show Notes:

  • 00:00                                   What’s going on guys? This is Nik Tsoukales from Key Credit Repair. Um, thank you for checking out our channel.
  • 00:05                                   So, question of the day is a pretty common one; “Why are my credit scores different for the three credit bureaus?”
  • 00:11                                   And I’ll give you an example, and you’ve probably seen this yourself. So, you’ve pulled up Tri Merge credit report, using maybe smartcredit.com or PrivacyGuard or even myFICO. Okay. And what you notice is your credit scores are different. Experian is 760, Equifax 745, and in this example, ah, TransUnion 752. What gives? I’m the same person. Okay.
  • 00:32                                   The scoring formula, let’s say it’s Fico 4, is exactly the same. So, why are they different?
  • 00:37                                   Well, keep in mind, these are three different organizations, okay? But that doesn’t really affect the scoring formula because, as you know, it’s one scoring formula, especially if you’re on myfico.com. Okay. Um, so if all the data was exactly the same, you’d assume that the three credit scores were the same. But keep in mind your creditors, debt collectors, banks, lenders, they’re not, they’re not all necessarily sending the same data to all three credit agencies. So, you could have a bank that for whatever reason is only sending data to Equifax and TransUnion and for, for whatever reason, they’re not sending that same data to Experian.
  • 01:20                                   Why they’re doing it? Um, various reasons. Is it common? No. Okay.
  • 01:24                                   Also, what you’ll find is sometimes the bank or lender, um, they’ve updated Equifax and TransUnion for this month but they, their systems have, have not yet batched out that data to Experian yet. Okay.
  • 01:35                                   So, you may have, ah, more positive, ah, reporting, more on-time payments reporting to Equifax and TransUnion on one particular trade line versus Experian. Okay.
  • 01:46                                   Other more drastic cases that we see a lot more common were, were we’re seeing scores, you know, from 760 to 660 let’s say, um, are with collections. Okay.
  • 01:55                                   So, let’s say you just incurred a collection. Okay. More than likely, that collection is gonna hit two out of the three credit agencies. It’s extremely common. Okay. The debt collector hasn’t, ah, subscribed to report to all three bureaus. Maybe just to save some bucks they’re only reporting to Equifax or they’re reporting to TransUnion and Equifax or just Experian. Okay.
  • 02:15                                   So, this is gonna happen. And this is why when you go and get something like a home loan, the bank or lender, they’re never gonna use the highest score, they’re never gonna use the lowest score. Typically what they’re doing is they’re taking the median score. The median is the middle of three values. It’s not the middle of the page or the middle of your credit report, they’re usually using the middle of three values.
  • 02:36                                   So, in this case if you went to get a mortgage, the bank or lender is usually gonna use your TransUnion credit score, if they are pulling a Tri Merge report. Okay.
  • 02:44                                   Some other products, like car loans, they might only pull one bureau, they only subscribe to one bureau. But most things, like a home loan, the majority of our clients, you know, they’re always gonna use the median score for this reason, because they will vary.
  • 02:58                                   Typical variations are somewhere within ten points. Okay. If the variations are more than that then that’s something you gotta dig into it. And when you look at that credit report, you have to analyze really, ah, negative marks. Have you had any negative marks and are they reporting to all three bureaus? Okay.
  • 03:14                                   And one way you can figure that out is certain Tri Merge reports, reports that have all three bureaus, they will actually separate the data with Experian, Equifax and TransUnion. So, you can actually compare the three right on a credit report.
  • 03:27                                   Now, if you’re looking at a, a credit report from a home lender, um, they’re usually using a Tri Merge where the data is actually merged. The payment history from all three bureaus will actually be all placed on one line. So you can’t actually see the difference between, ah, TransUnion, Ex-, Ex-, Experian and Equifax. Okay.
  • 03:44                                   If that’s the case then what you can do is you can either subscribe to an online credit monitoring like myfico.com and actually separate that data.
  • 03:51                                   Um, also you can ask your home lender to separate the data for you. So, your home, your home loan office should be able to call the company that they’re using to get their credit report. Some of those companies include, like, [inaudible 00:04:02] or LandSafe. And they can actually ask those companies, the company that put, mashed all the data together on their credit report, to separate the reports and actually submit them to see so you can see, if there is a drastic variation, what is the reason. Okay.
  • 04:18                                   Also … Excuse me. Also, keep in mind, if there is a large variation, like, let’s say this 760, um, with Experian is now a 660 with, with Equifax. But we have the same actual accounts on the credit report. Right away, that’s a red flag that we have some sort of inaccuracy on the credit report. Okay. And that’s something that should be challenged.
  • 04:39                                   So, if one credit agency is saying, “Hey, these payments are on time,” and the other agency is saying, “No, no, no, you have late payments,” well, we have an inaccuracy in some way, shape or form. And those late payments, if they are inaccurate, they need to get removed. So, that’s a pretty big red alert. Okay.
  • 04:55                                   Um, guys, any questions regarding the difference between the three credit agencies, the variations of your credit score, by all means click below. There should be a Learn More button right below here if you’re on, ah, Facebook, and there should be a Click Here Sign Up for $0 Today button which should be kinda showing up right here.
  • 05:13                                   This is Nik Tsoukales with Key Credit Repair, and this is your Credit Minute. Thanks.

 

Does Getting Married Affect My Credit?

Does Getting Married Affect My Credit?

Your Credit Minute Show Notes:

 

  • 00:00                                   Hey, what’s up YouTubers? This is Nick Tsoukales from Key Credit Repair answering your credit question of the day.
  • 00:06                                   So, we have, “Does getting married affect my credit?” Great question.
  • 00:11                                   So, let’s say you’re thinking of tying the knot like, ah, this young man and woman here that just got married. You’ll notice shackles there as well. Okay.
  • 00:20                                   I mean, you’re wondering, “God forbid, I married someone with bad credit, is that gonna affect me? I’ve been working hard my whole life, my credit’s perfect and I marry, you know, Jan or Lisa over here and, and she has, she’s not paying her bills for whatever issue, is it gonna affect me?”
  • 00:33                                   The good news is it’s, it’s not going to. Okay. Ah, your credit report belongs to your social and it’s totally separate from the person you’re married, married with. Okay. And it’s something that’s gonna set in after a certain number of years where everything is merged, it just doesn’t work like that.
  • 00:47                                   The only time you’re gonna share something on your credit report is when both of you have signed for that debt. So, let’s say you’ve been married for 50 years but you’ve always signed for everything individually. You will not, or, or your items will never appear on your wife’s credit report, okay? And vice-versa, okay?
  • 01:02                                   Um, but let’s say you buy a house together and you both sign on those mortgage documents, on that promissory note. That’s the case when, you know, it’s all gonna show up, um, on both of your credit reports. You share that liability, just as if you were co-signing for someone. Both of you are gonna be tied in, um, from a credit perspective at that point.
  • 01:21                                   But keep in mind your credit scores are totally separate, your socials are still totally separate, and even if your tax filing is joint it still doesn’t affect your credit score.
  • 01:29                                   Guys, this is Nick Tsoukales with Key Credit Repair. If you have any questions about how your credit works or you need some assistance with your credit, click on the Learn More button if you’re in Facebook or click on the Sign Up for $0 Today button if you’re in, ah, YouTube.
  • 01:42                                   Thanks guys, have a great day.

 

What Should I Do If a Collections Agency Calls About Old Debt?

Old Debt Scams: What Should I Do If a Collections Agency Calls?

Your Credit Minute Show Notes:

 

  • 00:00                                   What’s up guys. This is Nick Suggali with Credit News Daily.
  • 00:03                                   Great question of the day today. What should I do if a collection agency calls about an old debt? This is a simple answer. Do not engage. Do not engage. Don’t have a conversation. Don’t fight. Don’t do this back-and-forth. Do nothing, okay.
  • 00:22                                   Listen, if it’s a legitimate collection agency and they’re reaching out to you, they should be able to do it in writing. And when they do something in writing, you can reply in writing. And what happens, you have a paper trail, okay.
  • 00:32                                   You’re unsure if that debt is past the statutes of limitations? You’re unsure if the collection agency can verify the debt? You want to put them through the pressure of validating everything via the Fair D- Debt Collections Practices Act? Guess what? You can’t do that over the phone, you can only do that in writing.
  • 00:47                                   So my suggestion? If you do get on the phone by mistake with them, simply say this, “Hey Mr. Debt Collector, um, I don’t know who you are, I’m not validating everything. If you need to tell me anything, please send it in writing. [inaudible 00:01:01] have my address.” Click.
  • 01:03                                   Literally, click, okay? If they don’t have that information, they’re not legitimate, okay? Do not engage, do not verify anything. Um, one of the scams of a debt collection agency is they’ll call you and they’ll pressure you to make a five dollar payment towards a debt. Otherwise, they will send you to jail.
  • 01:20                                   Number one, they can’t send you to jail, and if you do send them five dollars in over the phone, guess what? You have re-initiated or restarted the statues of limitations. You’ve got another seven years of misery with that debt collection agency.
  • 01:32                                   Also, check some of our previous vlogs, okay? We have a reference point that shows you your state by state statutes of limitations, which shows you when each of these debts could possibly expire in the state that you live in. Okay?
  • 01:44                                   Also, even if a debt is within the statutes of limitations, what’s to say the debt collector can validate it, okay? Um, have you ever heard of something called the Fair Debt Collections Practices Act, probably haven’t. It’s pretty boring stuff. It’s on our website under the tab, “Credit Laws.” I would suggest reading through it or contact us to help you or assist you with this topic, okay?
  • 02:04                                   Ah, FDCPA, what it’s basically telling you is, “Hey, Mr. Debt Collector, you want money from a- a- um- ah, from a consumer? You need to be able to validate the debt. Show me um, your ability to buy debt my state. Show your license, your licensing to collect on debt in my state. Okay? Um, show me when the contract was signed, okay? Show me a copy of the contract. Show me copies of statements. Show me the bills. Show me proof of the date of last activity. If you have in fact, reported it to the credit agencies, okay?”
  • 02:37                                   Um, you know, validate that the statutes of limitation hasn’t in fact expired. Okay? So these are things you can ask for from these companies. But you should never, ever, ever engage over the phone. This is something you want to ask for via a letter, something you put in writing, something that should be sent to the debt collector. That way, you have your paper trail, you have everything dated, you can view registered letters if you don’t have a PO Box, so you know who’s signing for it.
  • 03:04                                   Um, but again, let’s get off the phone, guys. This is Nick Suggali with Credit News Daily, thank you for this amazing question. Let’s see where this one came out of. This one is out of let’s see here, we have Astoria, Queens, New York. All right guys, thank you so much. Have a great day.

How does co-signing affect my credit?

Your Credit Minute Show Notes:

 

  • 00:00                                   Guys, awesome credit question coming out of the Detroit, Michigan, today. We have, “How does cosigning hurt my credit score?” Okay. Probably the second biggest reason we get a phone call, aside from medical collections, is cosigning gone all wrong. Okay, let’s talk about what cosigning is, or co-guaran-, co-guaranteeing a loan, okay? Uh, you’re on it with them, okay? So, you could get called by a friend, and they say, “Just come and cosign for this car loan with me. I’m down at the dealership,” or, “Cosign for this mortgage,” or, “Cosign for a credit card.” It doesn’t matter. “Apply with me. Help we out this loan. I just need a signature, here.”
  • 00:39                                   Well, why would the bank just want a signature? They don’t just want your signature. They want a guarantee, okay? The way they … way more secure is by putting a … on the hook. So, first [inaudible 00:00:54] approve for it, okay? So, they say, “Bring on somebody that can sign with good credit,” and you get that phone call. Now, keep in mind, that item is gonna report to all three bureaus in the exact same way that it’s gonna report to the, uh, the primary borrow. If you cosign for your friends car loan, you’re getting that item the exact same way on your credit report, um, as a loan, as a- as a debt, okay?
  • 01:20                                   If you go to apply for something, you go to apply for your own home loan, and that liability is on there each month. Let’s say it’s a car loan and it’s $500. That $500 is gonna affect your income to debt ratio as well. Most banks and lenders, even if you tell them you’re paying it, they’re still gonna factor it into your income to debt ratio. Or, actually, let’s say you say, “My friend is paying it.” They’re still gonna factor it into your income to debt ratio. And, the reason for that is, they’re not sure if your friend’s gonna pay it. They don’t know who they are, so they’re gonna say, “Well, if you signed for it, you’re guaranteeing it, we’re factoring it into your income to debt ratio as well, which is gonna affect the amount you can borrow.”
  • 01:57                                   Now, that’s scenario one. That’s the biggest reason not to cosign, okay? But, there’s another big reason, and the other reason is, there’s no control. There’s zero control. Let’s say you cosign for your friends car loan, okay, and they default on that loan. What happens? Immediately you’re gonna get that late payment. They go into repossession status, you’re getting a repo on your credit. They send you to collections, that debt collector’s coming after you. That item becomes a judgment, because of your friend’s inability to pay. That judgment is coming to your credit report, okay? That’s gonna affect your ability to get approved for anything, and that’s a real big problem, okay?
  • 02:34                                   So, if you want to help out a friend, give them some money. Give them a ride, call them an Uber. There’s no reason you should be cosigning for them, because you’re getting on the hook for many, many years to come, and just like anything, you’re losing that control, and that control is everything. You work very, very hard to reestablish your credit, to build it up to a point where you can get started, or get started with approvals, um, and you don’t want to risk it, uh, for a friend. Help your friends, but in a different way. Thanks [inaudible 00:03:02]. Have an amazing day.

 

 

How Does Closing a Card Affect My Credit?

Your Credit Minute Show Notes:

  • 00:00                      Nik Tsoukales with your credit question of the day. We have, “How does closing a credit card affect my credit score?” So let’s break this down to a science. So, we’re going to uh, you’re going to see here we have the five factors that make up your FICO score. Or, we call them the FICO five, okay? So let’s break down how closing your credit card could or could not affect your credit score, and let’s go into the specific scenarios.
  • 00:23                                   So, let’s say for example, uh, you only have one credit card, and you close it out, okay? What’s typically going to happen is your going to see a massive credit score drop, believe it or not. And the reason for that is, number 130, percent of your credit score is based on debt. Specifically your credit card utilization rate. So, if you cut off all credit cards, um, really you’re not getting any of the points in that specific category, so you’re going to see a drop here. Okay? Um, also, 10% of your credit score is a mix of different types of accounts, okay? So all of a sudden, you don’t have what they call a revolving account. You’re going to see a drop here as well, okay?
  • 01:01                                   The other place you could see a drop is the age, okay? So let’s say the average age or length of history of all of your active accounts um, let’s say that account has some good age on it, or it’s been pretty old, it’s 10 years old, and you, and you, and you, uh, uh, deactivate that card, you’re going to see a drop here, so yes, um, shutting down credit cards could have a pretty big adverse affect uh, or pretty large drop in your credit score, and it can happen very quickly. So, I’d advocate you know, don’t carry balances, don’t carry the credit cards, but it doesn’t mean you need to shut them down. Now, if you think the temptation is too hard to resist, I would suggest taking that credit card, locking it up in a safe. Maybe putting it in a safety deposit account.
  • 01:47                                   If you have it only for the purpose of credit, um, maybe what you want to do, and I’ve advocated this before, is put it in a red cup, fill up the cup with water, stick it in your freezer. Sounds a little insane, why do I say that? For the obvious reasons, okay? You’re not going to make a compulsive decision to buy something, because that credit card is locked up in the freezer, okay? And if you do find something you really, really want, and you want to buy it, your going to have to melt the water. You’re going to have to melt the ice, and you are going to feel absolutely foolish and then going through those emotions, you might actually think twice about your next compulsive decision, okay? So another quick tip in terms of how to keep a credit card without having to use it.
  • 02:27                                   Um, now, let’s say you have a bunch of credit cards. Okay? Let’s say you have five credit cards, and they’re all fairly the same age, okay? And you really just don’t like this credit card, it’s a garbage annual fee. Maybe it’s the type of credit card you got when you first established your credit, and the annual fee really stinks, and the rates stink, and there’s just no purpose behind, and the service stinks, and you already have a bunch of really uh, good credit cards, where you’re getting the points, the rates are super low, you have a decent credit limit, so the utilization rate doesn’t get all wacky when you use it.
  • 02:58                                   That’s one of those scenarios where closing out one of those types of credit cards, you’ll probably see zero adverse affect, really. Because at that point, your utilization rate hasn’t been affected, okay, hasn’t been affected. Um, the age, by the way, this doesn’t mean your age, okay? The age of the accounts. Um, this really hasn’t been affective, because you have other really good healthy aged accounts. The types of credit in use, or credit mix, that’s not really affected either. Okay? So keep that in mind. Um, also payment history … Something else to keep in mind.
  • 03:32                                   Um, 35% of the score is payment history, um, so keep in mind, as long as you have other accounts reporting each month on-time payments, you are going to pretty much maximize this part of your credit score. Um, but if you don’t have enough accounts, you could see an adverse drop in your credit score, scenario one, by closing another credit card, because you could lose some points here, just because you have less accounts reporting an on-time payment. Um, 35% of your score, okay?
  • 03:58                                   So, you know, remember building credit, okay? We advocate opening up new accounts. Not going into debt, okay? Paying um, or using the card um, obviously you’re required to make a payment, but let’s say you haven’t used the card, and it’s a zero balance, by default you still get an on-time payment, okay? So we talk about that in the building process. We don’t need to go into debt to build up our credit report. Well, think of that in reverse. If you got 50 points from building up your credit scores, and use … Or building up those healthy accounts, and you start doing the opposite, just imagine those 50 points pretty much going away, if that’s all you have on the credit report.
  • 04:37                                   Guys, this is your credit minute. If you have more questions about whether or not you should close on an account, that’s definitely a phone call you should make to us, that’s something we can discuss in a Sign Up for $0 Today, actually looking at each of the trade lines. Looking at the age of those trade lines, and helping you make a healthy decision on whether or not you should or you should not close something. Have a great day. Bye bye.

 

How Long does it take for Authorized User to show on Credit Report?

Your Credit Minute Show Notes:

  • 00:00                                   What’s up, guys? Nikitas Tsoukales here with Credit News Daily. Listen, I want to do a quick follow up video to our last video. You probably already watched this. Um, trade line. Should I buy them? Um, if you’ve seen that video, I just want to add a little bit of something. I’m really just elaborating on authorized user accounts. If you remember from the last video, we were talking about authorized user accounts, and the big question we go, we get. Should I become an authorized user on someone else’s credit card, okay? So if you’re unsure what this is, an authorized user account is fairly simple. Okay, somebody you know, okay, has a credit card, and they make you a card holder on that credit card. For example, if you work for a big company, a lot of times they’ll say, “Hey, here’s a company credit card.” They’ve just made you an authorized user on that card. What you don’t realize is you actually get that positive reporting from that card to hit your credit report each month. So it’s a nice little loophole in building up some positive credit.
  • 00:56                                   Now there are some companies that actually sell trade lines or sell the ability to get on to someone else’s authorized user account. They call it piggy bank, piggy banking, uh, piggy backing. Um, it’s super shady, totally illegal. Obviously stay away from it. But if you have a spouse, okay, that’s had a credit card that you’ve been paying on yourself for many, many years but you’ve never been on it, you can actually get placed as an authorized user on that card and start getting the reporting from it, okay? So authorized user account. What is it? You’re basically piggy backing off of someone else’s credit card, okay? Now, you don’t want to do this with any other credit card other than a spouse’s, okay? And the reason why really has to do with lending criteria. So a lot of banks and lenders have seen people in the past use this loophole to, to build up their credit, okay, and build up positive trade lines and positive activity without actually uh, being credit worthy, okay? So they’re on to you if that’s what you’re doing. It doesn’t work anymore, okay?
  • 02:01                                   Fannie and Freddie, the companies or the government agencies that back the majority of our home loans these days, when they see that you have an authorized user account now on your credit report, they’re gonna ask you a question. Is it your spouse’s? If you answer no, they’re simply gonna tell you, “Get them removed so we can re-run credit,” because most major banks, lenders and the government agencies that are backing these loans just simply don’t consider them accounts. Okay, so even if you’ve got a temporary loophole lifting your credit because you’ve become the authorized user on your cousin’s credit card or your neighbor’s credit card, your boss’ credit card, guess what? It’s not gonna last, guys. It’s coming to and end, okay? But if you, if you’re added to your spouse’s card, you will get that positive credit and most major banks and lenders will allow you, um, to use it for, for your loan, understanding that it is one household. So it does affect your credit worthiness. Most likely you’re paying it with your wife or your, your spouse, right? Um, another thing is, uh, another question we get asked is, you know, do I get that person’s reporting from the beginning? Um, it used to be that when you became an authorized card holder on someone’s American Express, for example, okay? You actually got all of the previous payment history on that account. So let’s say you’re a pretty young guy, 20 years old, and your parents made you a cardholder on their American Express that they’ve had since 1965, technically speaking in the old days, you were getting all of that previous reporting from 1965 from before you were even born. Okay? It was one of the greater grand slams in artificially boosting your credit score. Um, that’s over with now, though. That does not exist, so when you become an authorized user on someone’s credit card, the reporting will start from the day you become an authorized user. You’re not getting someone’s previous history. The date open will be the date it was opened, the date you became a card holder, okay? So it’s something that I tell people to do a lot when it’s a spouse. If it’s not a spouse, stay away from it.
  • 04:03                                   Um, again, like I explained on the last video, if you need to build up positive trade lines, um, you need to get some new credit or you need to build up positive credit history after you’ve already damaged your credit score, the easiest, the smartest, the best way to do it is through a secured credit card. Your local bank and lender is typically gonna offer this, or your local bank or credit union. If you want to do this online, if you go to bankrate.com, they have an entire section on secured credit cards. Um, we’re not in there trying to get the best interest rate, guys. You’re not gonna get zero percent, 12 month APR, any of that jazz. You’re not gonna get the JetBlue points with these cards. These are starter credit cards. So when you get the credit card, use it uh, very minimally, okay? Maybe throw a cup of coffee on the card every month or two, just to show some usage and that alone should help you start building up the uh, the credit reporting and keep in mind our rule of thumb. You want to have a, a minimum of three active trade lines when you do this. So when you’re building up your credit, uh, whether you’re piggy backing off of a spouse or building up your own secured credit card, you want to have a minimum of three happening.
  • 05:06                                   So guys, any additional questions you have regarding authorized user accounts, feel free to e-mail me at NTsoukales@keycreditrepair.com. You can check us out here at Credit News Daily on YouTube and Facebook. We’re dropping a credit minute every single day of the week. Thanks guys. Have a great day.

Should I be Buying Tradelines? Watch this now!

Your Credit Minute Show Notes:

  • 00:00                                   Hey You Tubers! This is Nik Tsoukales, with Credit News Daily.
  • 00:03                                   Let’s talk about tradelines. Let’s talk about buying tradelines. I’m getting this question a lot, “Should I buy tradelines, I got a company, they emailed me randomly and they sell tradelines. I can get tradelines and have instant, amazing credit. Should I do it?”
  • 00:22                                   Um, short answer is, no. A-T- double hockey sticks, no. You should never, ever, ever, ever, ever, in a million years, ever buy tradelines.
  • 00:33                                   Number one, um, for those who don’t know what a tradeline is, it’s an account. Okay? Tradeline is a line item on your credit report, okay? And there are some strange, weird, shady companies out there that will sell you the ability to become an authorized user on other people’s accounts, okay?
  • 00:52                                   If you’re unsure what that is or you’re wondering what that is, let’s say me, Nik, I want to make you a cardholder on one of my credit card, uh, on one of my credit cards, okay? I can make you a cardholder, or something called an authorized user, okay? And even though you don’t necessarily qualify for that credit card, it will start reporting to the three credit agencies the date of the positive reporting, um, on-on your credit. Okay, you’ll actually get the credit from that credit, okay? Um, you’ve never qualified for it though, I’ve just added you.
  • 01:21                                   Now, there are some companies online right now, that are willing to sell you someone else’s tradeline. They’ll charge you a thousand, two thousand, three thousand dollars, and what you’ll do is you’ll become an authorized user on some random people’s credit card.
  • 01:35                                   Number one, don’t do this. And the reason you don’t want to do this, or there are quite a few reasons, the first is, it’s pretty highly illegal. The Federal Trade Commission is really frowning, uh, uh, upon this, okay? They don’t like this practice. The companies that are selling this stuff, most of them have been sent cease and desist letters. There have been some companies where the owners have actually gone to jail for selling these tradelines. It’s highly illegal, okay? The CFPB, the Consumer Financial Protection Bureau, is frowning upon this, okay? So they’re saying no also.
  • 02:11                                   Keep in mind, um, it’s not totally black and white, but the perc-, the perception of it is that you’re actually using someone else’s identity as well, okay? For the purposes of, basically ripping off future banks and lenders. It’s a shady practice, so you want to stay away from it.
  • 02:27                                   Another big reason, let’s say it wasn’t. Let’s say it was perfectly legal and perfectly fine. Another thing is, you’re not in control of your own credit. Guys, we teach you how to manage your credit cards, how to manage your debt, how to manage your on time payments, how to build a payment history, how to access different types of credit, the FICO five, I show you guys how to control the five factors that make up your FICO score.
  • 02:49                                   Well, when you sign up as an authorized cardholder on some random person’s card, you don’t control your credit anymore. If they go late on that card, you go late. If they max out that card, you’ve maxed out that card as well. Okay, so you are no longer in control of your credit report. And that alone should scare you to death.
  • 03:08                                   So, I would absolutely stay away from tradelines. Number one, you could get in some big trouble for doing it. Okay? That’s the big thing. The second thing is, even if you couldn’t get in big trouble for doing it, uh, you are going to, uh, be at risk, or you are going to be at risk of someone else controlling your credit. And that’s a major no-no in my book. Okay?
  • 03:28                                   Um, so, tradelines, stay away from them. Bad news. No good. Okay?
  • 03:32                                   Also, one other quick fact. In the old days, maybe about a decade ago, it used to be, when you did become an authorized cardholder on someone’s credit card, you actually got all of the previous reporting for that, uh, for that account on your credit report instantly. So, you could be a 19-year-old, become an authorized user on your parent’s credit card and all of a sudden you could have 20 years worth of credit history. Uh, you could have credit history longer than you’re actual age, right?
  • 04:01                                   Um, no longer happens. The day you become an authorized cardholder, that’s the day you get, uh, credit for it, okay? So, don’t fall, uh, for the scam that, “You’re going to have 20 years worth of positive credit history from American Express because you’ve been placed as a cardholder on someone’s account.” It’s just totally false as well. Um, so another reason to stay away from buying tradelines.
  • 04:24                                   The fourth reason is, it’s ridiculously expensive. Why, in God’s good name, am I going to give you a thousand, two thousand, five thousand … I’ve heard of some people paying five thousand dollars to buy tradelines … when I can go to my local bank or credit union, get a prepaid credit card, or excuse me, a secured credit card, in my name, that I control, okay, for five hundred bucks. Okay?
  • 04:50                                   And it doesn’t cost me five hundred bucks, it’s just five hundred dollars worth of collateral I put up with that bank, okay? They hold it there. It’s still my money. It’s at the bank, okay? Why would I pay some company a fee when I can do this myself and get secured credit cards.
  • 05:06                                   So, again, another reason. Four, five, there are a million reasons I could continue going down the list. So, guys, this is Nik Tsoukales, with Credit News Daily. Thanks for checking us out. You can reach out to us at www.keycreditrepair.com/free-consultation/ if you ever have any questions regarding your credit, hit us up. We’re, uh, we’ll be standing by.
  • 05:26                                   Have a great day. Bye.

 

 

How do I build my credit?

 

Your Credit Minute Show Notes:

 

  • 00:00                                   What’s up guys? This is Nik Tsoukales with Credit News Daily. So I got our question of the day, which is, the, actually the number one most searched credit related uh, question on Google uh, this year. Okay? Which is, how do I build my credit? Okay? So you’re either new to this country, you’re 18 years old, you’ve never used credit, or you’ve actually gone through some credit issues and you’re now starting again from scratch. So we need to answer this question, and it’s super duper important. Okay? How do I build my credit? Well, first thing we’re going to do, is we’re going to use a few rules of thumb, okay? Um, the first rule of thumb is, how many accounts do I need? Okay? The number that I like to use, and this is an almost an unofficial number, is the rule of three. Okay? What I like to see from each of my clients is a minimum of three active, healthy things. Okay? And the reason for that is, most banks and lenders, whether it’s a conventional loan, an FHA loan, um, whatever type of home loan eventually that you’re going to look to get, usually the banks and lenders like to see a minimum of three active healthy trade lines. Okay? You don’t necessarily need this for the credit score, but it’s definitely something you’d want to have for getting a home loan.
  • 01:09                                   So we’re going to use this three as well. And we’re gonna imagine that we’re pretending, um, that we are preparing to eventually get a home loan. Okay? Which is probably one of the bigger things that you’re gonna need your credit for. So the rule of three. Now keep in mind about 10% of your credit score is based on something called types of credit in use. So having different types of credit is very important, and you get some bonus points for it. Okay? So, if you’re, if you can’t fill this in with a home loan, what we do want to focus on is a couple of revolving accounts, and one installment account. Okay? So we’re going to put here, R, R, I. Okay? A revolving account is something like a credit card, okay? Or a line of credit. An installment account is gonna be something like a car loan, a personal loan, um, or a savings secured loan, or even a student loan. Okay? Now with the revolving loan, it’s going to be difficult for you to get approved for a credit card right now. Okay? So what I would suggest is something called a secured credit card.
  • 02:10                                   Now these should not be mistaken for a prepaid credit card. A prepaid credit card you put a few hundred bucks in a prepaid debit card. Okay? And you’re using that money. A secured credit card works a little differently. Where you’re gonna put let’s say $500, okay? Into a savings account with the bank. Okay? And the bank is gonna use that as collateral to issue you a credit card typically with a $500 credit limit. Okay? And then what we want you to do is use this card just a little bit. Okay? Now keep in mind 30% of your credit score is debt and how you manage it. So if you do get a small savings secured credit card, okay? And you overuse it, meaning you max out this 500 bucks, this part of your credit score, and we talk about this a lot on many of our videos, is actually going to drop. You’re not going able to get anything, okay? You’re going to have low credit scores instead of healthy credit scores. So my suggestion is, when you get this secured credit card, don’t use more than $50 on it. In fact, use it once a quarter as a maximum. Buy yourself, uh, a lunch or a cup of coffee, pay it off, pay it off the next day, and put it back in your sock, sock drawer. You want to really operate on a cash basis here. Okay?
  • 03:29                                   Um, secured credit cards can be found really everywhere right now. Bankrate.com has a slew of them. Um, your local bank, your local credit union. I’m almost sure 90% of these banks and lenders offer it right now. Um, I like doing business locally. Okay? If I’m late on the bill, I can quickly run over to the bank and pay it. Keep that in mind. We’re always trying to repair our credit. But we want to protect our credit. And we do make mistakes. Okay? So secured credit cards, guys, this is the, this should be number one, and number two on your list. And keep in mind you want to keep the balances super low. The last thing is an installment loan. Now, again, no bank really, when you have brand new credit is going to issue you a personal loan. Okay? Um, so what you can do is something very similar to the secured credit card with an installment loan. And you can get … Let’s actually make a little space here for you. You can get a CD loan.
  • 04:33                                   For all of you that are unaware, a CD is a certificate of deposit. It’s basically a savings account that uh, that you use at a bank. Your money gets locked into that certificate of deposit. You can’t take it out, okay? Um, many banks will allow you to put money into a CD. Again, let’s use this example. $500 into a CD, and then the bank, what they will do, knowing that you have collateral there, is they will allow you to get a $500 personal loan. Personal loan using the CD as collateral. Okay? A lot of banks, a lot of lenders will offer this, they’re really super duper popular at, at, at um, credit unions. Okay? Now, why not just get three revolving accounts? Well, that, that’s fine too. Okay? But again, remember 10% of your credit score is types of credit in use. Okay? So if you can mix it up with a little revolving and installment credit, you get a few little bonus points from that. Okay? Um, once you do this, okay? Let’s actually show you what the results are of this, because it’s pretty cool. Um, keep in mind with the installment loan, you don’t want to pay it off early. Okay? The interest is fairly minimum. Okay?
  • 05:50                                   Let’s say you got a 3% interest rate, or a 3% interest rate that you’re paying back with the CD loan, or the CD is making a little interest as well, that actually offsets the cost. But you don’t want to pay it off early, because the longer you keep these accounts open and active the more credit you get from them. But let’s think about where we’re getting our points from doing this, and how drastically, uh, the score can go up uh, a result of doing this. Okay? So you have 35% of the credit score is based on pay history, right? So the more on time payments you make, the more this is gonna be effective. So, you have three accounts now reporting on time, let’s say for six months, that’s going to affect that 35% pretty drastically, okay? Now, let’s say you take those revolving accounts and you manage them really conservatively. You keep the balances below 10% of the credit limit. Well guess what guys? 30% of your credit score is based on debts, okay? You’re managing these debts in a really conservative fashion. You’re getting bonus points as well here. Okay?
  • 06:54                                   Now check this out. You want to find some more points? 15% of your credit score is length of history. Okay? So by just having these accounts open for a long, long time and not opening and closing things is gonna affect this 15% of what makes up your credit score. So basically the age of your accounts affects your credit score in a positive way as well. Okay? And at least 10% of your credit score is based on types of credit in use. So by having a really nice mix of revolving and installment credit, you’re gonna maximize your points in this little category. So guys, building credit is one of the major ups we talk about at Key Credit Repair. We talk about cleanup, we talk about pay up, getting rid of debts. But we talk about buildup as well. This is huge.
  • 07:42                                   If you have any more questions about how to build up your credit, guys, check us out at www.keycreditrepair.com/free-consultation/. You can request a Sign Up for $0 Today from any one of our advisors, even myself. And we can walk you through this process in detail. Thanks guys. This is your Credit Minute. Have a great day.

 

How Much Do Hard Inquiries Drop Credit Score

Your Credit Minute Show Notes:

  • 00:01                                   What’s up YouTubers, this is Nik Tsoukalis from Key Credit Repair. Today, I’m going to address something very serious. Something that, for many of you, has made you quite sad. Hard inquiries. Okay? Some of you think this is devastating, this is the end of the world, you know? First, let’s talk about what is a hard inquiry. A hard inquiry is not when you check your credit score online, it’s not when you’re going to Credit Karma, or Privacy Guard, or Smartcredit. com. Anytime you’re checking your credit score for the purpose of credit education, credit monitoring, it does not hurt your credit score. A hard inquiry is a record that’s placed against your credit report when you are checking your credit for the purpose of blending, for being extended credit. Okay?
  • 00:48                                   And the question I get all day long is how much is my credit score going to drop if I have my credit checked? How much, how much, how much, how much, how much? Is my credit going to be destroyed? Is my credit destroyed? I’ve already checked my credit a few times with a few banks, is it over? Am I never going to get approved for something again? And the short answer to that is you are insane. You are insane. Stop listening to this craziness that hard inquiries are destroying your credit. It’s just false, it’s wrong, it’s totally not true.
  • 01:25                                   So let’s elaborate a little bit on this. So I’m going to reference my boys over at myFICO. com. If you’re not sure or not aware who FICO is, it’s Fair Isaac Company. Do you know those guys that invented credit scores? They tell us how inquiries affect your credit score. So I’m going to share this article below in the comments, but in the credit education section of myFICO.com, you can actually search inquiries, and it’s the first question that’s up there, and I’m going to read it off to you guys. Okay? If your FICO scores change, they probably won’t drop much if you apply for several credit cards within a short period of time. Multiple inquiries will appear on your credit report. Looking for new credit can equate with high risk. Okay? But that’s not definitive.
  • 02:16                                   But most credit scores are not affected my multiple inquiries from auto, mortgage, or student loans lenders within a short period of time. The short period of time is not defined. Guys, I’ve been doing this for 15 years, looking at credit reports for a long, long time. I’ve probably looked at, I don’t know, a hundred thousand credit reports, a couple hundred thousand credit reports. It’s almost absurd at this point. I can read these things, I can use ESP to probably tell you what’s on your credit report. I’ve seen so many of these things. The short period of time, I’d probably say 60 to 90 days, okay? If you’re shopping around for something like a mortgage and you want to check out a few different banks and lenders, you want to do a little rate shopping, okay? Keep in mind, to get a proper quote, they need to check your credit score. Don’t be afraid of doing this. It’s not going to hurt your credit score.
  • 03:13                                   FICO has told us, not just in this article but in multiple articles, that rate shopping increase are okay. So those hard inquiries, although they will appear on your credit score or your credit report, they’re not going to drastically drop your credit score. In fact, you may see absolutely zero drop in your credit score. In my experience, I have yet to see a credit report have any adverse effect, or credit score have any adverse effect from a hard inquiry. Guys, over a hundred thousand credit reports easily with my eyes closed, and I have never, ever seen a credit score drop because of a rate shopping inquiry.
  • 03:53                                   Okay, you’re shopping around for a car. Go nuts, go do what you need to do. You’re an educated consumer. Mortgage, go nuts. Shop for five, six banks. You have to. You’re trying to get a good deal. Guys, if you’re getting a mortgage, you’re talking about a 30-year commitment, and you’re worried about your, the hard inquiry affecting your credit score? You’re talking about paying back a bank over 30 years. It could be millions of dollars in interest and you’re worried about the hard inquiry or maybe the 10 bucks you’re going to spend to check your credit report? It’s insane. Same thing with a car. You’re paying back that car loan over the course of 5, 6, 7, sometimes even 10 years, that’s a lot of interest, so you got to make sure you’re getting a good deal.
  • 04:33                                   Um, now, for the first part of this, this answer, um, keep in mind, erratic behavior on your credit report could have an adverse effect. So, um, let’s say you decided to check your credit report a couple times with a credit card company, a couple times with the student loans company, a couple of personal loans, a couple of car loans, five or six mortgages, a few personal loans, and you did this all in one day. Okay? The credit scoring formula is designed to assess risk, okay, to protect future banks and lenders from making a wrong decision in terms of extending you credit, okay? So rightfully so, you could see a drop in your credit score. That’s a red alert. You are now a red alert, okay, maybe you’re a flight risk, maybe you’re about to leave the country forever and ever.
  • 05:25                                   I’ll give you an example. You’re about to leave the country forever and ever, you’re never coming back, and you decide, hey, right before I head out of this place, I’m going to go nuts. I’m going to buy a bunch of stuff, I’m going to get a Macy’s card, a Target card, a Walmart card, a few personal loans, a few car loans. I don’t know what you’re going to do with a car loan. A few lines of credit, and you’re going to go crazy. You could be considered a flight risk, and that’s the only case where you could see a drop in your credit score. And I have to tell you, that is extremely rare. I’ve never seen it before, but that’s what we’ve been told by FICO on numerous occasions.
  • 06:03                                   So guys, hard inquiries, if you’re doing it for the right reasons, don’t be scared of it. Do it, trust your lender. They know what they’re talking about guys, and they’re not going to drop your credit score. Okay? Um, and I’m going to squash one more misconception or one more myth, okay? Or make you guys aware of something. If you’re monitoring your credit score online, you’re on a Credit Karma, you’re on a Privacy Guard, you’re on a ScoreSense, you’re on any of these websites, keep in mind, most of these websites are not using the Fair Isaac Company Scoring method that banks and lenders use, which is typically a, kind of an older version, which is like FICO 4 or FICO 5, okay? These are 20-year-old scoring formulas. They’re using things like VantageScores, um, Credit Plus scores, those scoring formulas are not used by banks or for educational purposes only, but they’re also for marketing purposes.
  • 06:54                                   So they have an incentive to tell you that the world, um, is going to be over because you just had an inquiry. And the incentive they have is when they send you an email saying you just had an inquiry, red alert, login to the website, check the app. They’re going to offer you something. You’re going to login to the app, that’s the bait to get you to login to their app, and when you login to their app, what’s there? There’s a banner for a credit card, there’s a banner for some sort of marketing affiliation they have, there’s a banner for something, and they’re making money on those offers. Because most of these credit reporting companies, what are they? They’re marketing companies, they’re marketing platforms. You get your credit report and score for free, you login, every time you login, they’re marketing something to you. They get your data, they’re reselling it to companies, all this jazz, okay?
  • 07:44                                   So they really, uh, have been pushing this inquiry myth in a big, big way, to get people to login to their websites. Red alert, you’ve had an inquiry, the world is over. Um, new world order is taking over because of inquiries. Login quick, we will save your life. It’s false, it’s a lie, it’s garbage, okay? So guys, in terms of inquiries, that little frown, let’s turn it upside-down. Why don’t we do this together. Okay? Let’s smile. Do your job, do your rate shopping. Guys, this is Nik Tsoukalis with Key Credit Repair. Thank you for checking out our Credit Minute. Subscribe up here, down here, depending if you’re on Facebook or YouTube. Check us out for a Sign Up for $0 Today, our staff is standing by, and have an amazing day. See you guys.