Intro

You’re trying to improve your credit. I definitely don’t want you to pay for any kind of credit repair, because it’s hard to figure out which ones are scams and which ones are not. This is all about how I use CreditWise and how I think it could help you improve your credit score and monitor your credit. CreditWise is a free service. I’m sure it’s run by Capital One. They’re getting your information, probably hoping that you open accounts with them or get a credit card with them, but it’s free, and you can use it to know where your credit is and how to improve it. I’m going to use my credit as an example and hopefully it’ll help you.

Because I didn’t get a lot of credit education growing up, I never really had bad credit. But I did make dumb decisions at the beginning of being able to borrow money. God just kind of protected me. For example, I wanted a Mazda 626 or some kind of Mazda car. I didn’t have credit, and the interest rate was 23%. At the time, I didn’t know if that was good or bad or anything.

Average Interest Rates

The best way for anybody to know, same way you’re looking at mortgage interest rates, what’s good and what’s bad, is to know what the averages are. What are the average interest rates for a car loan? What are the average interest rates for a home loan? And why are you being charged double or triple of what that is? That’ll help you know whether you’re making a good or bad financial decision. But at the time, I didn’t know.

How I was protected is that my grandfather was going to help me co-sign, but he had a repossession on his credit, so he couldn’t even help me. So I wound up saving up and just buying a car with cash. I bought a Nissan Sentra for about $6,000 at the time. That was the first step of me really figuring all of this out and knowing what to do. Even at an early age, I bought my first house at 23, and my mid score was a 779. So it doesn’t take long to really establish credit.

But there are two primary things you need to make sure you do in order to keep a good credit score. I did a video on this too, a 7-day plan on how to improve your credit. These are the two most impactful things you could probably do, and I’m going to use CreditWise as an example. There are two major credit scoring models. One is the Vantage credit scoring model. The other is the FICO credit scoring model, and most lenders use FICO as their bar to see whether or not they’re going to loan you money.

The Vantage score uses some of the same criteria as a FICO score, so it really can help you. If your Vantage score is going up, then more than likely your FICO score is going up. If your FICO score is going down, more than likely your Vantage score is going down. A lot of the paid products, like myFICO, you have to pay for. That’s going to give you your FICO score. A lot of the free products, like Credit Karma and CreditWise, give you Vantage scores.

As an example, my Vantage score is 824. My FICO score is 836. I also get my FICO score free from one of my lenders, a credit card I use, and even my bank gives it to me now. That’s where I got the FICO score from, and I got the Vantage score from CreditWise, but they’re both good. Credit works in ranges. It’s not that if somebody pulls the 824, I’m going to get a worse interest rate than if someone pulled the 836. I don’t really worry about it as long as it stays in a high range. Same thing if you’re in the 700s, there’s going to be a range where you’re going to get the same rates and the same kinds of things offered to you.

So the two primary things, and I’m going to show you the CreditWise credit simulator too. The two main things I make sure of, in order to keep my credit and my husband’s credit healthy, because a lot of our things are connected, is making sure we keep a low utilization of our overall available credit.

Credit Utilization

I like to use $10,000 as an example. Our credit utilization, which I just pulled this month so I could make this video, is 8%. We’re using 8% of our overall available credit. Typically, if you’re keeping this amount lower than 10%, that is going to help keep your credit score high. Your credit score will start to go down when you’re using a lot of your available credit, generally over 50%. Using our $10,000 example, if you have charged anything above $5,000, your credit is going to take a hit because you’re using the majority, over 50%, of your available credit.

Once you get that down lower than 50%, you are able to get a bump in your credit score. The next increase in your credit score typically comes when you get your available credit balance lower than 30%. So 50% is your first target if you’re already above it. Your next goal is to get it lower than 30%, and from there, less than 10% is ideal.

If you can do that, some ways that can help are making sure you’re not charging a lot of things and that you budget. We do a budget every month. I’ve been married for 20 years this July, and we’ve tried different things. One time we did it where you’ll do the bills for 6 months, I’ll do the bills for 6 months, but it’s really a matter of who likes to do it more, who has a strength in that area. It turns out it’s me. I think Dave Ramsey said it’s the nerd and the free spirit. I’m the nerd, he’s more of the free spirit. So we find that that works.

I do make sure the budget we use is accessible. So if he ever had to pay things himself, if something happens to me, he knows the login, the passwords, all of that, and he’ll be able to take it over. That’s one thing you have to make sure you and your spouse are on the same page about. I’ve done a whole playlist about buying a house when married, budgeting married, so watch those as well. But this is really about making sure that gets below 10%.

The easiest way, of course, is to start paying off your debt. But I also periodically ask some of my credit cards to increase the limit. Even though I’m not planning on charging something, sometimes they’ll say no, they’ll say you’re not using it anyway, why would we give you more if you’re not using it. I have gotten denied that way, but typically I try to ask every year for a credit line increase. It makes it even easier to keep that amount lower than 10%.

Payment History

The other one is payment history. I have 100% on this, which is what I’m getting from CreditWise. I’ve never paid a bill late. It’s really important, it will kill your credit score. Even a 30-day late payment can kill your credit score. Growing up, my mom used to say, “I just have slow credit.” I never really understood what that meant. Now, as an adult, I understand that really meant she was paying her bills, but she might pay some of them late.

She was still able to buy a house and do the things she needed to do financially, but it’s not ideal. I don’t think she had all the resources and websites we have today to really monitor what’s going on with your credit. She didn’t know until somebody pulled her credit and said, hey, you need to work on this or that. But you have the opportunity with these websites, apps, and AI to really know what you’re doing and how to improve it. That’s why I would never pay for credit repair, because you can do it yourself, and it also helps you educate yourself as to what’s happening with your credit score.

With the 100%, I do things to really make sure our bills are going to be paid on time and never late. One of the things I already mentioned, I take it over, so there’s no miscommunication and no bills paid outside of our budget. It’s not like my husband pays his cell phone bill separately, or he pays the water, I pay the gas. Everything is in one pot, and then everything gets paid out, so there’s no miscommunication about when something got paid and when it didn’t. It’s all coming out of one area.

I have my budget video and a video on how we budget money. I won’t get into that here, but this is all about making sure you’re not paying bills late.

Bills

Do the bills two times a month. I do them around the 1st and on the 15th. I know when everything comes in, and I have it all written out. If anything ever happens to me, my husband will be able to take it over and know how to get into the accounts. Some of the bills I do have on autopay, because I don’t want to miss it, since we don’t use credit cards regularly and I might forget that we had a payment on a credit card that somebody used. So I make sure those are autopaid, so we never miss a credit card payment.

But some bills I don’t have on autopay. I’m sitting down consistently and paying all of those bills two times a month. I’d say about 80% of our bills get paid on the 1st, and the other 20% might get paid on the 15th. Money is coming out very quickly, it’s just a matter of when that bill comes due.

I put some safeguards in place so I’m never paying anything late. Here’s something helpful to know: if somebody has a foreclosure on their credit, they can buy a house in three years. They get a three-year kind of grace period, and it usually only takes two years to get their credit back to where it needs to be. The credit scoring model doesn’t hold some of those negative things against you forever. As those things age out, your credit improves.

Credit Simulator

Another thing I like about CreditWise is that they have a credit simulator. That credit simulator lets you put in different scenarios and see what will happen. I put in that I would pay a bill 60 days late, and it took my credit score down about 120 points. It was crazy, and a lot of people don’t understand how drastically your credit can be impacted by that.

Other things the credit simulator can do: show how continuing to make your payments on time would help you over one year, 6 months, or 18 months; buying something with your available credit, meaning you move it past that percentage; increasing the limit on a credit card; opening a new credit card; canceling your oldest credit card (never do that, just keep it, because it’s part of your credit length); borrowing money to buy a house; borrowing money to buy a car; taking out a personal loan; applying for a loan. It also covers some of the negative things you can simulate, like paying a bill late by 30, 60, or 90 days, or allowing an account to be delinquent, and it will show you how much that can impact your score.

I like it because it’s free. But it’s a Vantage score, so it’s not exactly what your lender may use when you’re doing particularly mortgage borrowing. So when you’re getting closer to borrowing money or making a big purchase, you may want to get that FICO score from myFICO.

Hope this was helpful. This is how I use CreditWise, and I’m not on it all the time, but if I was trying to improve my credit, I’d be on it all the time. If you want to improve your credit even more, check out my 7-day plan. It’ll tell you everything you need to do to get your credit where you want it to be.