HOW TO BUILD YOUR CREDIT SCORE 💰 Establish and Build Credit Guide! you#Best Education Page #Online Earning

how's it going today guys so today were

going to be talking about how to build

credit as a young person or how to

establish credit as someone who may have

a bad credit history but you're looking

to rebuild your credit so I'm going to

give you guys advice and some of this

works for someone who is looking to

re-establish credit but all these pieces

of advice will work for someone who is

looking to build credit for the first

time as a young person because this is a

common problem that we run into because

it's one of those things where you need

credit established in order to get

approved for a line of credit but how do

you initially establish that credit who

is going to be the first one to trust

you and loan you a line of credit so I

have some excellent tips for you guys

and I'm going to share my personal

experience as well with this to let you

guys know how I built credit as a young

person and how I have the credit score I

do today so first of all what is a

credit score so a credit score is

basically a numerical representation

that represents the creditworthiness of

an individual so there's three main

scores that are used there's three

credit rating agencies that will rate

your credit and report these back to

people who are looking to get a report

on your credit number one is through

Equifax number two is Experian and

number three is the TransUnion FICO

score and all three of these will be

scored slightly different so for example

my credit score through Equifax for the

757 while my FICO score came in at a 761

so they were pretty close to each other

they use the same exact scoring

mechanism but the scores are slightly

different now when they give you a

credit score it's going to be on a scale

of 300 to 850 300 being the absolute

lowest you could go and 850 being the

absolute highest you could go so 850 is

perfect credit that's the highest credit

score you can get and I don't know

anyone with a credit score of 850 I do

know some people though with credit

scores in the 800 so that is fantastic

but if you look at the actual credit

score this is going to break down who

has you know excellent credit versus

good credit versus fair poor or bad

credit so if you're someone who is in

the range of 300 to 580 you have bad

credit if you're in the range of 580 to

640 you have poor credit 640 to 700 I

think that

the average credit somewhere in there

that's fair credit if you're above 700

you're doing pretty good so 700 to 750

is considered good credit while 750 to

850 is considered excellent credit so

this is the first time that I've

actually fall into the category of being

above 750 so I'm actually someone with

excellent credit because I've been

building it for years and I've been

really good with payments and I've been

using credit cards in the right way and

we're going to talk about all this later

on when we talk about ways to establish

or build your credit but first of all I

just want to stress the importance of

having a good credit score and why you

actually need to establish credit

because it's so crazy to me how many

young people were never taught this and

their end at the end of so far behind in

the future because they have no credit

established and they're either trying to

buy a house or buy a car or good

approved for student loans and they

can't get anything done they have to get

a cosigner for everything and they're

like wow why are those why are some

people so far ahead when it comes to

credit why did some people get this

lesson and others didn't so if you're

somebody who is 18 years old I highly

recommend you start thinking about

establishing credit because it's very

easy to do it

fortunately the bank I was at is the one

who recommended that when I turned 18 I

opened up a secured line of credit and

we're going to talk about that in a

second but hopefully someone along the

way has stressed to you the importance

of establishing credit especially at a

young age but here are six really good

reasons as to why you need to have a

good credit score number one if you

eventually plan on buying a house you

need to have good credit in order to be

approved for a mortgage and also get a

good rate on that mortgage number two if

you ever plan on buying a car so most

people probably buy a car used off

Craigslist and they pay cash for it as a

teenager but if you do eventually want

to drive a nicer car and you want to

have a car payment you're going to need

to have good credit to be approved for

an auto loan so it's better to establish

credit when you're younger then by the

time you're in your 20s you'll be able

to be approved for a car loan at a good

rate without having to have a cosigner

or a co borrower on their number three

is getting a job a lot of people don't

realize this but many employers run a

credit check as well as a background

check so for most jobs they are going to

run a background check but they also in

some cases run a credit check to see how

you are you with your credit to see

you are responsible with your payments

and with your credit cards number four

for renting an apartment this is a big

one most places that you rent in a good

area they're going to want a credit

report so they want to make sure you're

responsible with your bills because they

don't want to have you be a bad tenant

so if you do at some point want to rent

your own place and it's going to be an

area where they're likely going to check

your credit that's another good reason

to establish credit number five if you

have any plans on starting a business

and you want to secure some kind of

financing for that business you need to

have good credit in order to get a small

business loan of some kind and number

six is probably the most important one

is getting a lower interest rate because

lower risk borrowers pay a lot less in

interest unfortunately there's a lot of

bad people out there that charge just

ridiculous interest rates for cars a lot

of those buy here pay here places they

really take advantage of young people

who have little credit established or

they have bad credit they're going to

get you involved in some ridiculous 20%

interest rate on some crappy used

vehicle unfortunately this happens to so

many people and they get roped into

these scams and I feel really bad that

this is even legal to charge that much

in interest but I've personally talked

to friends of mine who have cars that

are used cars that they bought at some

buy here pay here place and they're

paying twenty percent interest on like a

ten thousand dollar used car and it's

like unbelievable so you don't want to

be in that situation you need to think

about establishing credit as a young

person or if you're somebody with poor

credit you really need to rebuild your

credit and let's go ahead and talk about

how you go about doing that and number

one is probably the easiest one

especially for young people and this is

the first thing I ever did in order to

establish credit and that is to get a

secured or backed credit card through

your bank so basically what they do is

very simple you're going to get a credit

card backed by a CD or a certificate of

deposit essentially what that is that

it's a account to deposit your money

into and that money is then locked up so

you can't access it and you get a small

rate of return on the money you have

invested in that CD so in my case I know

I opened up a $500 CD and I got a 0.25

percent interest rate on it so nothing

earth-shattering but the good thing was

it was able to allow me to open up a

credit card at that point because the

deposit in the CD matches

dollar-for-dollar your credit limit

extended to you by the bank

d is used as collateral so with zero

risk for the bank because if you load up

that credit card and you don't pay it

off they seize that CD and they pay off

the balance of your card that way so

there's no risk involved for the bank

because you're basically extending

yourself your own line of credit that

way so I highly recommend this for young

people as soon as you turn 18 go to your

bank and ask them about opening up a

secured or backed credit card and this

is like the number one thing you can do

to start building credit I did this like

the day I turned 18 I was a pretty wild

teenager as you can tell worrying about

my credit at 18 years old but I am glad

that someone pointed me in the direction

of this and encouraged me to do this

because right now I have great credit

for a young person then what I recommend

doing is using the card to pay for gas

and then paying it off each month that's

exactly what they told me to do with the

bank that's exactly what I did every

week when I bought my gas I put it on my

secured credit card and then when the

bill came in the mail I would pay the

full balance that way I'm not paying

interest you don't have to keep a

balance on cards in order to build

credit you can pay it off each month and

you're going to build credit just as

much as someone who carries a balance so

don't think you need to carry a balance

on the card just because you have the

ability to so once the card is unsecured

you get your deposit back so they either

close out that secured credit card or

they may just take the requirement to

have a backing on it off in my case they

called me up one day and they were like

hey you know you've established enough

credit you've been responsible with your

payments we are going to take away the

backing on your credit card so now I

still have a CD with that bank which I

should close out but it's something it's

only five hundred dollars so it's not

something that I think of regularly but

it is still out there they just they

just love to in a CD but now I still

have that same five hundred dollar

credit card but it's not backed by

anything now it's a true line of credit

and I still use it in the exact same way

I put my gas on it and then I pay it off

each month so you should look at a

secured credit card as a way to open the

door for an unsecured credit card that's

going to be the next step so you don't

want to just solely rely on that secured

credit card you want to use it to

establish enough credit to the point

where you'll be approved for a regular

credit card that's not backed by a

certificate of deposit here's another

way you can build credit and this is

also great for people looking to

establish credit over again

so if you had a bad buying history and

you're looking to rebuild your credit

is a credit builder loan what's great

guys there's a lot of resources out

there that are going to help you rebuild

your credit so if you have bad credit

it's not like you're doomed I mean you

can rebuild it it takes time but it's

very doable so a credit builder loan I

highly recommend for people who have bad

credit now and they want to improve

their credit score basically this is a

loan designed to help you build credit

or a forced savings plan it's very

simple kind of similar to a back credit

card basically you borrow a small amount

of money short term so this may be $500

$1,000 $1,500 and that money is placed

in a CD and as we said that is an

account that you can't access you can't

draw money from it so the bank has that

money in an account and they know you

can't withdraw from it so they offer you

a loan they put it over here in a CD you

earn a small rate of interest and then

you're going to pay off that loan plus

some interest to the bank and once the

loan is paid in full the funds are

released to you and they're either held

there in that CD or they're deposited

into your account so it's basically a

forced savings plan that allows you to

build credit in the same way so this is

a great way for people to establish or

repair their credit number three is co

borrowing now you have to be careful

with this because you have to understand

if you are Co borrowing on someone's

loan so if your friend comes up to you

and says hey trying to get approved for

a car loan they want me to pay 18%

interest but they say if I get a

cosigner my interest rate will be a lot

less can you sign for me understand that

if they don't pay that loan off if

they're not making their payments you're

responsible for those payments so I know

sometimes you're trying to help people

out but make sure this is somebody you

trust make sure maybe it's a family

member or a very close friend your

co-signing for but understand you're

responsible for that loan if they're not

making their payments but when you have

a co borrower the combined credit

qualifies that loan and adding a co

borrower can help you get approved or

lower your interest rate so on the first

car that I bought from a actual place

that I didn't pay outright for when I

got a loan they wanted to give me a nine

point nine nine percent interest rate

but I got my dad to co-sign with me and

that got me down to under four percent

now because I've established enough

credit and I've since then got a

different car I'm on my own loan and I

have a good interest rate on a car and I

didn't have to have a cosigner so that's

one of the advantages of having good

it is you don't have to pester your

parents or your friends to get a

cosigner when you do this when you do

have a co bar or understand that both

borrowers are responsible for that debt

so both borrowers build credit in the

process so having a cosigner or being a

cosigner for someone if you trust them

can be a way for you to build credit now

also one thing you can do is if you are

possibly spending money that your

parents give to you or maybe your

parents are paying for your food or for

your guests just become an authorized

user on the credit card of a family

member and you're actually going to

build credit history without the legal

obligation of paying back that debt so

obviously you want to make sure you're

on the same page with what you're buying

don't load up their credit card and go

here you go I'm not obligated to pay

that that's a bad move but if you're

using that card anyway to pay gas why

not be an authorized user that way

you're able to build credit history in

the process so I highly recommend that

too for young people that's probably

something you could do before or at the

same time you're getting a secured or

backed credit card number four is a huge

one - and people don't know this I

actually didn't know this until right

now but when I did the research for this

but there are actually paid services

where you can track your rent payments

and get credit for making rent payments

on time so there's paint services out

there that allow you to get credit for

paying your rent you do have to pay form

each month in most cases the ones I can

see I've never used one so I can't

recommend one but I'm sure if you do

some research or ask around you could

figure out what's the best one to use

but understand that rent payments that

are not being reported are not building

your credit so unless you're renting

from a large property owner they may be

reporting that but if you're renting

from a family member or renting from a

friend or renting from somebody who has

a very small number of homes they're not

reporting that as far as building your

credit so you have to on your own make

sure you're reporting those on-time

payments so this is one way that you can

build credit through on-time rent

payments and you can build credit with

something you're already doing so if

you're somebody after who's already

paying rent every single month you might

want to look into a paid service to

actually track those rent payments so

you get credit for them and this is

another great way to build your credit

and it's going to help you when renting

in the future because you'll be able to

say oh here's my renting history here's

three years of on-time rental payments

so that's another great advantage of

packing your rent payments that build

your credit and it helps you with

renting in the future okay so the

question that many of you may be asking

yourself right now is how long will this

actually take so if you're someone who

just starts following these steps you

just begin to open a secured credit card

how long until you have a credit score

or a credit history it's going to take

at least six months and maybe even up to

12 months as well as repairing your

credit until you see a difference I

think most credit agencies require you

to have a six month history before they

even generate a credit score so it does

take some time but definitely after

twelve months if you've been following

these steps you should see your credit

score going up and you should be seeing

your credit score recover if you're

someone who is trying to re-establish

credit but I have seven final tips for

you guys here as far as good credit tips

and things you should be doing to keep

yourself from getting in a pinch and

ending up in a bad situation where you

have to rebuild your credit number one

is pay all your bills on time because

you want to avoid going into collections

at all costs so this could be cell phone

bills this could be medical bills this

could be your utility bills if you get

behind on your bills they may send it to

a collections agency and this may ding

your credit they may put this a

derogatory mark on your credit if your

bills are in collections so that is one

way you can get yourself in trouble is

by not paying your bills number two be

responsible with credit card use so in

for low or no credit utilization do not

carry large balances on your credit

cards because that is how people get in

trouble when they can't keep up with

their payments and make sure if you are

paying down a credit card pay at least

more than the minimum balance because if

you're paying that minimum balance

you're barely paying any principal

you're mostly paying interest and you're

going to have that hanging around

forever

number three is keep track of balances

and payments so this is something that I

actually did by accident on my card I

didn't realize that I had a balance on

it I think I had a four dollar balance

on one of my credit cards and I had no

idea I had a balance on it so next thing

you know I get a call from my bank

saying I have a late fee I'm like I

don't have any balance on that card and

they go oh you have a four dollar

balance and I'm like what the late fee

they're like $25 I'm like $25 for a four

dollar balance so I talked to the lady

she got rid of that actual late payment

because we talked about it I explained I

had no idea that I had

nowlet's on there so in most cases if

you do get a late fee or any kind of

penalty just call the bank up talk to

them and see if you can get rid of it

because in most cases I've heard people

have been able to get rid of late fees

just by calling so don't just give in

make sure you call and try to get it

resolved but it's best to not end up in

that situation anyway so just keep track

of your balances and when your payments

are due because if you have multiple

cards they may all be due at different

times so just stay on it and make sure

you have the apps on your phone too so

you can just jump in there and check

when things are due number four avoid

interest like the plague interest get so

many people in trouble when they get a

credit card and they go oh I have $1,000

no you don't you have $1,000 available

to you in a line of credit at likely 20

plus percent interest so don't go out

there and buy a brand-new iPhone and a

bunch of clothes use it responsibly buy

gas with it or buy groceries and pay it

every single month do not load it up and

then try to pay it down that is not a

good credit utilization strategy that's

how people get in a lot of trouble

number 5 open two accounts a year

maximum because every time you open an

account they have to run your credit and

check your credit and it's called a

credit inquiry at that point and every

time they inquire about your credit that

is actually a mark that goes on your

account so make sure you keep track of

every time someone inquires about your

credit and try to avoid doing that more

than twice a year number six keep unused

accounts open to build history it's also

a derogatory mark on your credit to

close a credit so if you do have a line

of credit out there and you're not

paying a monthly fee or a yearly fee to

have that credit card just leave it open

because it's building credit history for

you and it's actually a derogatory mark

when you close that account and number

seven check your report monthly for

errors this is a very scary one but I

remember reading a story about a woman

who had the medical bill of someone who

shared the same name as her got assigned

to her credit so she logged on or I

think she was applying for a loan

applying for a car loan and the guy

there said oh your credit is terrible

she was like what are you talking about

I have phenomenal credit and he said you

need to take care of your medical bills

and she goes I have no medical bills so

she ended up finding out that there was

a derogatory mark put on her credit

score that didn't belong to her because

it was the same name but it was somebody

else so make sure your check

your credit monthly in order to make

sure there are no errors on there and it

took that woman months if not a year to

actually resolve that I remember it was

a ridiculous process to actually get

that mark removed from her credit score

so I hope that never happens to you guys

but make sure you do keep track of your

score and make sure you don't have

anything on there that shouldn't be on

there anyways guys that's pretty much

all I got for this video this is how you

build credit as a young person and how

to establish credit if you will have

not-so-good credit I hope you guys learn

something from this video if you enjoyed

it please drop a like and if you are new

to my channel please consider

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uploads and as always I thank you guys

for taking the time to watch this video

you

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