Let me ask you a question. Is your credit score broken? If not, then why do you need it fixed? The truth of the matter is that your credit score doesn't need to be fixed, it just needs to be improved. There's a whole industry of companies that I refer to as the Debt Solutions business that want you to believe that they had a magic formula for correcting your credit score. I say there is no need to pay them hundreds of dollars for something that you will do better on your own.

In fact, in most cases, they cannot even do what they claim. I'm going to show you everything you need to know to get that credit score healthy again, you will soon see that it is not rocket science. They don't have a magic formula that's only available to them. The credit score is crucial. The reality is that the better the credit score, the more options that you have, plus a good or bad credit score can influence a lot of other areas of your life. So we're about to do credit score one on one and I'm going to teach you everything that you need to know.

Hi, I'm Bob Brooks, you know being a radio host. I get a unique opportunity to really listen and understand what people are dealing with. When it comes to money, I get to hear their concerns. I get to hear their fears, hopes, and their confusion. And it's interesting because if you draw out a top five areas of confusion, credit scoring definitely would be part of it. There's a lot of misunderstanding when it comes to credit reports and credit scores, and how to deal with them.

And today, I'm going to take you through the entire process. Once you get through at this video, you're going to understand how to go through the process of not fixing or repairing anything, improving your credit score, and how that works. It's really not that difficult of a process. First of all, let's talk about who holds your credit file. You have three credit files, and you have TransUnion, Experian, and Equifax. They're the three credit reporting agencies that holds your information.

And if you look at how the FICO score, I know you've heard of that and how that is put together. That was developed in 1989 by a company called Fair Isaac Corporation. And they develop the FICO score. And that's what the credit, the credit reporting agencies had to go to FIFO to get the scoring because they had a monopoly on it. Now, here's how that would work, the credit reporting agencies, they obviously they hold the information on each consumer. Now if they want to get a credit score, they have to go to FIFO.

They have to pay FIFO for the credit score every single time. Now, you can probably imagine from a business standpoint, they're starting to think you know, this makes no sense. Why should we hit let FIFO have a monopoly on credit scoring, so they developed the Vantage scoring system. Now with the Vantage scoring system, obviously, they have to make it different, they have to make it more competitive, they have to market it as a better way to credit score reality is, is that it's just a little bit different of a way to go. The way that they write your score is through A through F. And so it makes it a little bit more relatable to the consumer. But you can see that goes all the way up to 990 Whereas the FICO score goes to 850.

And you can get your either an A A, B, C, D, or unfortunately could be an F for high risk. This is from a FIFO standpoint, this is the areas of scoring. And you can see how it's broken down from total debt to payment history and kind of where they put the biggest weight. This is the Vantage scoring so you can tell it's just a little bit different than the FICO scoring system. Now a good score on a FICO score is anywhere from 720 to 850. The Vantage score is 701 to 990.

I would just think of it from the standpoint of whether you had an A or a B rating, that checking your credit report. This is also part of the process. There's a couple of ways to go about doing that. First of all, you could do it the free way, which is to the government based program, triple W dot annual credit report.com you got to be careful. There's a lot of imposter sites out there that mimic this particular site but it's annual credit report.com go through the process, there's only a couple of problems with it. Number one, from what I understand it is a little bit more of a difficult process a tedious process to go through.

And you know, it's free, and they don't give you the credit score. Now to me, you can get all that information and it means nothing to you if it's not scored, and you can buy your credit scores. But if you're going to spend money, spend a couple of dollars more and go to one of the paid sites. The example I have up here is true credit calm. This is just one of many of the sites, what you're looking for in a paid site is the ability to see all three credit reports and your scores and be able to see what is on your credit, your credit reports. But going through the paid sites has always made a little bit more sense to me, because it's easier and you're really only paying a couple of dollars more to do it.

Now let's talk about really the process of organizing and seeing what's on these credit reports. And remember, this is a process you have to go through for each one of your credit reports because different information can be on Each one of the credit reports. So let's first let's start with categorizing information. You're going to take and categorize in three different categories. All the information on your report you're going to look at is the information correct. Now, here's, here's something interesting.

You may say, Well, that's negative, that's wrong, that shouldn't be there. But if it should be there, it's got to be there. It's correct, whether it's positive or negative remark, or is it a information that has an error to it? And if it's if it needs to be corrected, so it's a correct information, but the information is an error somehow, so we want to correct that. Then there's information that is not you. And the Federal Trade Commission's approximates that one out of five credit reports.

There's information on it that is not the person's or the consumers information. So this happens all the time and give you a personal story about when I was age 25. I was I was buying my first house. And I had I was applying for a mortgage and the mortgage company called me and I said, you know, Bob You didn't tell us you had a bankruptcy. So I didn't tell you how to have a bankruptcy because I don't have a bankruptcy. So I'll know there's a bankruptcy on your credit report.

It was the same name of a person in a different state. Unfortunately, I caught it. But had I done my due diligence had I gone through my credit reports and made sure everything was accurate, that would have been avoided, avoided. So you're going through and you're putting you're categorizing the information. Now, it's the negative information that we're most concerned about that we want to get off of the credit report. That's information like missed payments, debt collections, tax liens, it just you name it, the negative information, we want to get off of the credit score, because the credit report because it's dragging down your credit score.

So this is a very important time period to understand. I think that as we go through the process, you'll see this is not difficult. You're going to look for this time period, it's seven and a half years past the first missed payment. Now, there's a point where a debt goes bad or a debt gets in trouble and that is typically the first Missed payment that starts with a series of unfortunate events. So it's from that point seven and a half years later, that's how long that item has to report on your credit report. But once you get past the seven and a half years, the good news is that you can get that completely removed from your credit report and watch your score go back up.

So here's the key to it. If you're right now in a situation where you've just gone into collections, or some negative things are happening, it's real important that you go in and you document that first missed payment, because that's going to be a critical piece of evidence to get that information removed from your credit report. Now disputing information. So you have information, let's say that's on your credit report that shouldn't be there. It's either in that third category or it's information that's wrong. So what you want to do is approach this like an attorney.

You want to have a case build a very strong case for why that item shouldn't be on there. wouldn't send a letter into the credit reporting agency and say, Hey, listen, this item shouldn't be there, can you remove it, investigate it and remove it, I would go ahead, you want to you want to put a case together and said, this is why they shouldn't be on there and offer documentation. And you know, make sure that they understand that you've got a solid case and a solid reason for disputing that information. Now, how to dispute since since this is a time based video that we're shooting today, this information could change. So I would just direct you to the websites, because currently on those three websites, they have information links of how to dispute information, of fortunately on a few of them, they make you buy a credit report, and they make you spend some money, but that's just the process you have to go through.

And that's the business of credit reporting. Now, credit repair companies. Now, this is what's interesting about the industry is that these companies come out and they make these outrageous claims. They're going to get rid of bankruptcy. They're going to Get rid of foreclosures, tax liens late payments charge off. They're just going to make it all of a sudden disappear.

And let me say, this is my disclaimer in that industry, I'm sure that there's some good companies doing it the right way. And they're very helpful in getting an improved credit score and getting your report like it's supposed to, then there's the companies that tell you, you know, here's what I want you to do, we're going to dispute everything on your report, and see if we can get it removed. Now, the whole process of disputing is bait is is for the purpose of saying, hey, there's a an item on my credit report that shouldn't be. And here's why. It's not just disputed anyway, but this is what they want you to do, because they're playing a game. What happens once you dispute information on your credit report, the credit reporting agency has to investigate.

So they have 30 to 45 days. They send information to the creditor and they say is this information correct? Please respond back. But what ends up happening it it falls on somebody's desk. They don't get around to it in 30 to 45 days by law, if that creditor has not responded back, the credit reporting agency has to remove that item from your credit report, just like that. But here's the thing is that sooner or later, that catches back up with you sooner or later that creditor comes back to the the credit reporting agencies says, Hey, listen, that should be on that report.

And so what ends up happening, initially, that item is suppressed, not removed, it's suppressed. So it's kind of put off to the side waiting on that response. But when that response comes back, it comes back on your report. Here's the reality of it. There is no after I feel pretty confident I can say this. There is no company that can go in and just say, Oh, you got a bankruptcy on there?

Well, yeah, we'll just get rid of that. You have a judgment on there. We'll just get rid of that. It's not accurate and it's not an accurate claim. So just know that these have to always call it credit, credit report prison. That negative item has to stay on there for a day it has to serve.

Its time for seven and a half. But once again, once that's over with and that's most items, some items like judgments or 10 years, but once that is over with that can be removed and you can start getting a healthy credit report once again. So let's talk about tips to improve your score. Make sure everything is accurate we talked about that this is extremely important down to addresses spellings of names you want everything correct on your credit report. Positive activity, I often get the question about how do I improve my credit report? Well, it comes down to positive credit activity and positive credit activity is charging on a on a credit card and paying it off charging on a credit card paying it off over and over being repetitive.

The more that you do that and then over time as some of these negative items drop off, you're you'll start to see your score go up. And then there's just time. You know, I'll have people call me and they'll say you know, I want to buy a house in a couple of months. So what are what I need to do to get these these items off. And I'll tell them, you know, it just takes time. Yeah, you can't rush the process, because those items have to remain on the credit report for a specified time period.

And then watch those balances. This is a real critical part of credit scoring. And this weighs heavy on your credit score. It's called credit utilization ratio, what they're looking at, they're looking at the grant the total amount of credit limits you have available to you. Okay, so let's say you have $10,000 a credit limit, and then they're looking at how much are you utilizing of that credit limit? So let's say that you're utilizing $2,000 of the the 10,000.

So that's a 20% credit utilization ratio, if it's below 30, which 20% obviously is, that's good. That's, that's healthy for your credit score. But let's say that you're you're utilizing 5000 maybe $6,000 with the credit that's 50 to 60% credit utilization. That is way too high over the 30. And that's going to bring it down your credit score down. Another common question is, well, should I close this account?

Once I pay it off, I know it's kind of one of those things I'm done with that debt, I want to get rid of that, that card, I want to get rid of that credit limit, I want to pay it off, be done with it. That's that's a natural feeling. However, it's not a good idea to close the credit card account, because that's gonna affect your credit utilization ratio. The fact that you have, let's say, $10,000 on a credit limit, and you're not utilizing any of it. That is zero utilization. That is great for your credit score, and you want to keep it open at all times.

Available credit, this is also good if you get the opportunity to add credit and not use it that once again helps the credit utilization ratio inquiries. You have to know that every time somebody inquires inquiries on your credit report, and there's two different types. We'll get to that in just a second. That's about a two point deduction every time that happens. And also if you see if if a creditor is trying to approve us for something and they see a lot of inquiries, that's a little bit of a red flag. Now, there are two types of inquiries, there's a soft inquiry and a hard inquiry, a soft inquiry might be for a job interview.

So it's really not, it's not about taking credit out. It's just, it's just to find out that what kind of credit risk you are a hard, hard inquiry is going to be all about getting credit. So one counts against you one doesn't the soft one doesn't. We talked about this, keep accounts open, and then secured credit cards. This is a great tool. if let's say you can't get credit, your credit score is non existent or it's bad, and you want to start rebuilding it.

Then what you do is get a secured credit card, a secured credit card is a credit card that is secured by a deposit. So let's say that I go to a bank, they have a program, and they're going to give me $750 in credit limit. So with that 750 dollars though I have to give them a deposit of $500. Now, that is reduced the risk, so they're really only out 250 if you if you default on that debt. So what happens, you take that card and by the way, the downside to those cards, they are expensive, the fees are high. But if you take that card and use it to have positive credit activity, month in month out, you know the formula that will help to start building up credit.

The other thing it will do is once you show that bank that you're that you're not a credit risk, then they will raise that credit limit without asking you for more money and giving you the ability to charge more and pay off more. So what's the bottom line? You know, I know it's confusing when you hear about FICO scores, Vantage scoring and and then there's different versions of the Vantage score. But the bottom line is this. Don't let all that be create confusion because it really comes down to the bottom line. Keeping balances low, paying on time, utilizing credit in in a healthy way and not running up debt.

It the same things apply the same tips apply for both. So if you're doing those things and you have the right things on your credit reports, then you're gonna have good credit scores. The reality of it is we've got to have good healthy credit scores because we are in a finance based economy, and the credit score comes up quite a bit. But the good news is that this is something you can do yourself. You don't have to have anybody do it for you and just remember, it just takes time.